PR 6-3A Sales-related and purchase-related transactions using perpetual inventor

Question

PR 6-3A Sales-related and purchase-related transactions using perpetual inventory system The following were selected from among the transactions completed by Babcock Company during November of the current year: Nov. 3. Purchased merchandise on account from Moonlight Co., list price $85,000, trade OBJ.2 discount 25%, terms FOB destination, 2/10, n/30. 4. Sold merchandise for cash, $37,680. The cost of the merchandise sold was $22,600. 5. Purchased merchandise on account from Papoose Creek Co., $47,500, terms FOB shipping point, 2/10, n/30, with prepaid freight of $810 added to the invoice. 6. Returned $13,500 ($18,000 list price less trade discount of 25%) of merchandise purchased on November 3 from Moonlight Co. 8. Sold merchandise on account to Quinn Co., $15,600 with terms n/15. The cost of the merchandise sold was $9,400. 13. Paid Moonlight Co. on account for purchase of November 3, less return of November 6. 14. Sold merchandise on VISA, $236,000. The cost of the merchandise sold was $140,000. 15. Paid Papoose Creek Co. on account for purchase of November 5. 23. Received cash on account from sale of November 8 to Quinn Co merchandise on account to Rabel Co., $56,900, terms 1/10, n/30. The cos of the merchandise sold was $34,000 28. Paid VISA service fee of $3,540. 30. Paid Quinn Co. a cash refund of $6,000 for returned merchandise from sale of November 8. The cost of the returned merchandise was $3,300. Instructions Journalize the transactions.

Explanation / Answer

Date Accounts Titles and Explanation Debit Credit (Figure in $) 3-Nov Merchandise Inventory             62,475 Accounts Payable - Moonlight Co.           62,475 4-Nov Cash             37,680 Sales           37,680 4-Nov Cost of Goods Sold             22,600 Merchandise Inventory           22,600 5-Nov Merchandise Inventory             47,360 Accounts Payable - Papoose Creek Co.           47,360 6-Nov Accounts Payable - Moonlight Co.             13,230 Merchandise Inventory           13,230 8-Nov Accounts Receivable - Quinn Co.             15,600 Sales           15,600 8-Nov Cost of Goods Sold              9,400 Merchandise Inventory             9,400 13-Nov Accounts Payable - Moonlight Co.             49,215 Cash           49,215 14-Nov Cash          2,36,000 Sales        2,36,000 14-Nov Cost of Goods Sold          1,40,000 Merchandise Inventory        1,40,000 15-Nov Accounts Payable - Papoose Creek Co.             47,360 Cash           47,360 23-Nov Cash             15,600 Accounts Receivable - Quinn Co.           15,600 24-Nov Accounts Receivable - Rabel Co.             56,331 Sales           56,331 24-Nov Cost of Goods Sold             34,000 Merchandise Inventory           34,000 28-Nov Credit Card Expenses              3,540 Cash             3,540 30-Nov Customers Refunds Payable              6,300 Cash             6,300 30-Nov Merchandise Inventory              3,460 Estimated Returns Inventory             3,460 Notes Nov. 3: $85,000 - ($85,000 × 25%) = $63,750 $63,750 - ($63,750 × 2%) = $62,475 Nov. 5: $47,500 - ($47,500 × 2%) + $810 = $47,360 Nov.6: $13,500 - ($13,500 × 2%) = $13,230 Nov. 13: $62,475 - $13,260 = $49,215 Nov. 24: $56,900 - ($56,900 × 1%) = $56,331

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