At the beginning of July, CD City has a balance in inventory of $3,150. The foll

Question

At the beginning of July, CD City has a balance in inventory of $3,150. The following transactions occur during the month of July. July 3 Purchase CDs on account from Wholesale Music for $2,050, terms 2/10, n/30. July 4 Pay freight charges related to the July 3 purchase from Wholesale Music, $120. July 9 Return incorrectly ordered CDs to Wholesale Music and receive credit, $200. July 11 Pay Wholesale Music in full. July 12 Sell CDs to customers on account, $5,300, that had a cost of $2,750. July 15 Receive full payment from customers related to the sale on July 12. July 18 Purchase CDs on account from Music Supply for $2,850, terms 2/10, n/30. July 22 Sell CDs to customers for cash, $3,950, that had a cost of $2,250. July 28 Return CDs to Music Supply and receive credit of $250. July 30 Pay Music Supply in full.

Explanation / Answer

july 3:
inventory db) 2050
acc payable (cr)2050

july 4:
freight charges expense (db)120
cash (cr) 120

jul 9:
inventory(db) 200
acc payable (db) 200

jul 11:
cash (cr) [.8*2050]-200=1,440
acc payable (db) 1850
discount received (cr)410

jul 12:
revenue (cr) 5300
acc rec (db) 5300
inventory (cr) 2750
cost of goods sold (db) 2750

jul 15:
cash (db)5300
acc rec (cr) 5300

jul 18:
inventory db) 2850
acc payable (cr)2850

jul 22:
revenue (cr)3950
cash (db) 3950
cogs (db) 2250
inventory (cr)2250

jul 28:
acc payable (db) 250
inventory (cr) 250

jul 30:

cash (cr) 2850-250=2600
acc payable (db) 2600

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