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James Company began the month of October with inventory of $31,000. The following inventory transactions occurred during the month:

1. The company purchased merchandise on account for $46,000 on October 12. Terms of the purchase were 2/10, n/30. James uses the net method to record purchases. The merchandise was shipped f.o.b. shipping point and freight charges of $660 were paid in cash.
2. On October 31, James paid for the merchandise purchased on October 12.
3. During October merchandise costing $20,400 was sold on account for $31,200.
4. It was determined that inventory on hand at the end of October cost $56,340.

Required:
1. Assuming that the James Company uses a perpetual inventory system, prepare journal entries for the above transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

Journal entries

No	Account and explanation	Debit	Credit
a	Merchandise inventory (46000*98%)	45080
	Account payable		45080
	(To record purchase)
b	Merchandise inventory	660
	Cash		660
	(To record freight)
c	Account payable	45080
	Merchandise inventory	920
	Cash		46000
	(To record payment)
d	Account receivable	31200
	Sales revenue		31200
	(To record sales)
	Cost of goods sold	20400
	Merchandise inventory		20400
	(To record cost of goods sold)
e	No entry