eople Styles ALEKS Question #1 Journalize the following transactions for Price C

Question

eople Styles ALEKS Question #1 Journalize the following transactions for Price Company using the gross method of acoounting for sales dscounts. Assume a perpetual inventory system. Also, assume a constant gross profit ratio for all items sold. Make sure to enter the day for each separate transaction. September 8 Sold goods costing $7.820 to White Company on account, $13,200, terms 3/10, n/30. September 18 Received the amount due from White Company. September 14 White Company was granted an alowance of $3.300 for returned merchandise that was previously purchased on account. The returned goods are in perfect condition. Date Debi Creda Sept 8 Accounts Peceivabe Sales 13.200 I ^ ClearUndo

Explanation / Answer

Journal Entry Date Particulars Dr. Amt. Cr. Amt. 8-Sep Accounts Receivable    13,200.00 Sales Revenue    13,200.00 (record the sales made to White Co.) 8-Sep Cost of Goods Sold      7,920.00 Inventory      7,920.00 (record the cost of goods sold) 14-Sep Sales Return & Allowances      3,300.00 Accounts Receivable      3,300.00 (Record the sales return by White Co.) 14-Sep Inventory      1,980.00 Cost of Goods Sold      1,980.00 (Record the cost of goods sold adjusted due to sales return) Gross Profit Rate = ($13,200 - $7,920) / $13,200 Gross Profit Rate = 40% Value of Inventory Return = $3,300 - ($3,300 X 40%) Value of Inventory Return = $3,300 - $1,320 Value of Inventory Return = $1,980 18-Sep Cash      9,603.00 Sales Discounts          297.00 Accounts Receivable      9,900.00 (Record the Cash recd from White Co.) Cash recd = $9,900 X 97% = $9,603 Sales Discounts = $9,900 X 3% = $297

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