Hutton Company uses a sales journal, a purchases journal, a cash receipts journa

Question

Hutton Company uses a sales journal, a purchases journal, a cash receipts journal, a cash disbursements journal, and a general journal. The following transactions occur in the month of March. Mar. 2 Sold merchandise costing $310 to B. Fager for $465 cash, invoice no. 5703. 5 Purchased $2,500 of merchandise on credit from Marsh Corp. 7 Sold merchandise costing $837 to J. Dryer for $1,214, terms 3/10, n/30, invoice no. 5704. 8 Borrowed $8,000 cash by signing a note payable to the bank. 12 Sold merchandise costing $209 to R. Land for $334, terms n/30, invoice no. 5705. 16 Received $1,178 cash from J. Dryer to pay for the purchase of March 7. 19 Sold used store equipment for $900 cash to Malone, Inc. 25 Sold merchandise costing $360 to T. Burton for $565, terms n/30, invoice no. 5706.

Explanation / Answer

Only sales on account (credit sales) are recorded in the sales journal. It seems that is all the question is asking for. Set up a four column sales journal with the headings: Accounts Receivable (Debit), Sales (Credit), Cost of Goods Sold (Debit), and Merchandise Inventory (Credit). These are the only transactions that would be reported in the sales journal: 7 Sold merchandise costing $800 to J. Dryer for $1,150, terms 210, n30, invoice no. 5704. Dr Accounts Receivable 1,150 Cr Sales 1,150 Dr Cost of Goods Sold 800 Cr Merchandise Inventory 800 12 Sold merchandise costing $200 to R. Land for $320, terms n30, invoice no. 5705. Dr Accounts Receivable 320 Cr Sales 320 Dr Cost of Goods Sold 200 Cr Merchandise Inventory 200 25 Sold merchandise costing $350 to T. Burton for $550, terms n30, invoice no. 5706. Dr Accounts Receivable 550 Cr Sales 550 Dr Cost of Goods Sold 350 Cr Merchandise Inventory 350$

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