Preston Company sells candy wholesale, primarily to vending machine operators. T

Question

Preston Company sells candy wholesale, primarily to vending machine operators. Terms of sales on account are 2/10, n/30, FOB shipping point. The following transactions involving cash receipts and sales of merchandise took place in May of this year:

May 1 Received $ 2,156 cash from L. Reilly in payment of April 22 invoice of $ 2,200, less cash discount.
4 Received $ 1,096 cash in payment of $ 1,000 note receivable and interest of $ 96.
7 Received $ 588 cash from K. L. Shannon in payment of April 29 invoice of $ 600, less cash discount.
8 Sold merchandise on account to D. Padilla, invoice no. 272, $ 489.
16 Cash sales for first half of May, $ 2,265.
17 Received cash from D. Padilla in payment of invoice no. 272, less cash discount.
20 Received $ 325 cash from L. N. Salas in payment of April 16 invoice, no discount.
21 Sold merchandise on account to R. O. Wilcox, invoice no. 273, $ 935.
24 Received $ 220 cash refund for return of defective equipment that was originally bought for cash.
27 Sold merchandise on account to R. Jarvis, invoice no. 274, $ 450.
31 Cash sales for second half of May, $ 2,845.

Required
1. Journalize the transactions for May in the cash receipts journal and the sales journal. Assume the periodic inventory method is used.
2. Total and rule the journals.
3. Prove the equality of the debit and credit totals.

Explanation / Answer

Solution:

In the books of Preston Company

Cash Receipt Journal

( DEBIT ). (CREDIT)

Sales Journal

From the above given journals we can prove the equality of the debit and credit totals.

Date Account credited P.R. Cash($) Discount($) Sales($) A/c Receivable($) Sundry account($) May,1 L. Reilly 2156 44 2200 May, 4 Note receivable 1096 1000 96 May, 7 K.L. Shannon 588 12 600 May, 16 Sales 2265 2265 May, 17 D. Padilla 479.22 9.78 489 May, 20 L.N. Salas 325 325 May, 24 Purchase return 220 220 May, 31 Sales 2845 2845 May, 31 TOTAL 9974.22 65.78 5110 4614 316

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