Sansomite Co. distributes suitcases to retail stores and extends credit terms of
ID: 2366873 • Letter: S
Question
Sansomite Co. distributes suitcases to retail stores and extends credit terms of 1/10, n/30 to all of its customers. At the end of June, Sansomite’s inventory consisted of suitcases costing $1,200. During the month of July the following merchandising transactions occurred.July 1 Purchased suitcases on account for $1,800 from Trunk Manufacturers, FOB destination, terms 2/10, n/30. The appropriate party also made a cash payment of $100 for freight on this date.
July 3 Sold suitcases on account to Satchel World for $2,000.The cost of suitcases sold is $1,200.
9 Paid Trunk Manufacturers in full.
12 Received payment in full from Satchel World.
17 Sold suitcases on account to The Going Concern for $1,500. The cost of the suitcases sold was $900.
18 Purchased suitcases on account for $1,700 from Kingman Manufacturers, FOB shipping point, terms 1/10, n/30. The appropriate party also made a cash payment of $100 for freight on this date.
20 Received $300 credit (including freight) for suitcases returned to Kingman Manufacturers.
21 Received payment in full from The Going Concern.
22 Sold suitcases on account to Fly-By-Night for $2,250. The cost of suitcases sold was $1,350.
30 Paid Kingman Manufacturers in full.
31 Granted Fly-By-Night $200 credit for suitcases returned costing $120.
Sansomite’s chart of accounts includes the following:No. 101 Cash,No. 112 Accounts Receivable, No. 120 Merchandise Inventory, No. 201 Accounts Payable, No. 401 Sales, No. 412 Sales Returns and Allowances, No. 414 Sales Discounts, No. 505 Cost of Goods Sold.
Instructions:
Journalize the transactions for the month of July for Sansomite using a perpetual inventory system.
Explanation / Answer
July 1 Purchased suitcases on account for $1,800 from Trunk Manufacturers, FOB destination, terms 2/10, n/30. The appropriate party also made a cash payment of $100 for freight on this date. Debit Merchandise Inventory 1800 Credit Accounts Payable 1800 July 3 Sold suitcases on account to Satchel World for $2,000.The cost of suitcases sold is $1,200. Debit Accounts Receivable 2,000 Credit Sales 2,000 Debit Cost of Goods Sold 1,200 Credit Merchandise Inventory 1,200 9 Paid Trunk Manufacturers in full. Debit Accounts Payable 1800 Credit Cash 1746 Credit Merchandise Inventory 36 12 Received payment in full from Satchel World. Debit Cash 1980 Debit Sales Discounts 20 Credit Accounts Receivable 2,000 17 Sold suitcases on account to The Going Concern for $1,500. The cost of the suitcases sold was $900. Debit Accounts Receivable 1500 Credit Sales 1500 Debit Cost of Goods Sold 900 Credit Merchandise Inventory 900 18 Purchased suitcases on account for $1,700 from Kingman Manufacturers, FOB shipping point, terms 1/10, n/30. The appropriate party also made a cash payment of $100 for freight on this date. Debit Merchandise Inventory 1700 Credit Accounts Payable 1700 Debit Merchandise Inventory 100 Credit Cash 100 20 Received $300 credit (including freight) for suitcases returned to Kingman Manufacturers. Debit Accounts Payable 300 Credit Merchandise Inventory 300 21 Received payment in full from The Going Concern. Debit Cash 1485 Debit Sales Discounts 15 Credit Accounts Receivable 1500 22 Sold suitcases on account to Fly-By-Night for $2,250. The cost of suitcases sold was $1,350. Debit Accounts Receivable 2250 Credit Sales 2250 Debit Cost of Goods Sold 1350 Credit Merchandise Inventory 1350 30 Paid Kingman Manufacturers in full. Debit Accounts Payable 1400 Credit Cash 1400 31 Granted Fly-By-Night $200 credit for suitcases returned costing $120. Debit Sales Returns and Allowances 200 Credit Accounts Receivable 200 Debit Merchandise Inventory 120 Credit Cost of Goods Sold 120
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