P 2. Vargo Company engaged in the following transactions in August 2011: Aug. 7
ID: 2367616 • Letter: P
Question
P 2. Vargo Company engaged in the following transactions in August 2011:
Aug. 7 Sold merchandise on credit to Ken Smith, terms n/30, FOB shipping point, $3,000 (cost, $1,800).
8 Purchased merchandise on credit from Novak Company, terms n/30, FOB shipping point, $6,000.
9 Paid Smart Company for shipping charges on merchandise purchased on August 8, $254.
10 Purchased merchandise on credit from Mara's Company, terms n/30, FOB shipping point, $9,600, including $600 freight costs paid by Sewall.
14 Sold merchandise on credit to Rose Milito, terms n/30, FOB shipping point, $2,400 (cost, $1,440).
14 Returned damaged merchandise received from Novak Company on August 8 for credit, $600.
17 Received check from Ken Smith for his purchase of August 7.
19 Sold merchandise for cash, $1,800 (cost, $1,080).
20 Paid Mara's Company for purchase of August 10.
21 Paid Novak Company the balance from the transactions of August 8 and August 14.
24 Accepted from Rose Milito a return of merchandise, which was put back in inventory, $200 (cost, $120).
Required
Prepare entries in journal form to record the transactions, assuming use of the perpetual inventory system.
Explanation / Answer
Aug. 7 Acct Rx Dr 3000 Sales Cr 3000 Aug 7 Cost of goods sold Dr 1800 Merchandise inventory Cr 1800 Sold merchandise on credit to Ken Smith, terms n/30 Aug 8 Merchandise inventory Dr 6000 Acct Payable Cr 6000 Purchased merchandise on credit from Novak Company, terms n/30 Aug 9 Freight Charges Dr 254 Cash Cr 254 Paid Smart Company for shipping charges on merchandise purchased Aug 10 Merchandise inventory Dr 9000 Acct Payable Cr 9000 Aug 10 Freight Charges Dr 600 Cash Cr 600 Purchased merchandise on credit from Mara's Company, terms n/30, Aug 14 Acct Rx Dr 2400 Sales Cr 2400 Aug 14 Cost of goods sold Dr 1440 Merchandise inventory Cr 1440 Sold merchandise on credit to Rose Milito, terms n/30 Aug 14 Accounts payable Dr 600 Merchandise Inventory Cr 600 Returned damaged merchandise received from Novak Company Aug 17 Cash Dr 3000 Acct Rxable Cr 3000 Received check from Ken Smith for his purchase of August 7. Aug 19 Cash Dr 1800 Sales Cr 1800 AUg 19 COGS Dr 1080 Merchandise Inv Cr 1080 Sold merchandise for cash, $1,800 (cost, $1,080). Aug 20 Acct Payable Dr 9000 Cash Cr 9000 Paid Mara's Company for purchase of August 10. Aug 21 Acct Payable Dr 5400 Cash Cr 5400 Paid Novak Company the balance from the transactions of August 8 and August 14 (6000-600)=5400. Aug 24 Sales Cr 200 Acct Rx Dr 200 Aug 14 Merchandise inventory Cr 120 Cost of goods sold Dr 120 Accepted from Rose Milito a return of merchandise, which was put back in inventory,
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