John’s Specialty Store uses a perpetual inventory system. The following are some

Question

John’s Specialty Store uses a perpetual inventory system. The following are some inventory transactions for the month of May 2018:

John’s purchased merchandise on account for $6,200. Freight charges of $900 were paid in cash.

John’s returned some of the merchandise purchased in (1). The cost of the merchandise was $1,200 and John’s account was credited by the supplier.

Merchandise costing $3,400 was sold for $6,400 in cash.

Required:
Prepare the necessary journal entries to record these transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Explanation / Answer

Title Debit Credit Merchandise inventory $ 6,200 Accounts payable $ 6,200 (To record purchase on account) Merchandise inventory $     900 Cash $     900 (To record payment of freight charges) Accounts payable $ 1,200 Merchandise inventory $ 1,200 (To record return of merchandise purchased) Cash $ 6,400 Sales revenue $ 6,400 (To record sales) Cost of goods sold $ 3,400 Merchandise inventory $ 3,400 (To record cost of goods sold)

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