Exercise 8-1 Perpetual inventory system: journal entries [LO8-1 John\'s Specialt

Question

Exercise 8-1 Perpetual inventory system: journal entries [LO8-1 John's Specialty Store uses a perpetual inventory system. The following are some inventory transactions for the month of May 2018: 1. John's purchased merchandise on account for $5,200. Freight charges of $400 were paid in cash. 2. John's returned some of the merchandise purchased in (1). The cost of the merchandise was $700 and John's account was credited by the supplier. 3. Merchandise costing $2,900 was sold for $5,400 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

1. Purchases a/c Dr. 5200$

To creditors. 5200$

Freight a/c Dr. 400

To cash. 400

2. Creditors a/c Dr. 700$

To purchases. 700$

3. Cash a/c Dr. 5400$

To sales. 5400$

Income statement a/c Dr. 2900$

To COGS. 2900$

  

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