Question

The following selected transactions were completed by Air Systems Company during January of the current year. Air Systems Company uses the periodic inventory system.

Jan.	2	Purchased $18,200 of merchandise on account, FOB shipping point, terms 2/15, n/30.
	5	Paid freight of $190 on the January 2 purchase.
	6	Returned $2,750 of the merchandise purchased on January 2.
	13	Sold merchandise on account, $37,300, FOB destination, 1/10, n/30. The cost of goods sold was $22,400.
	15	Paid freight of $215 for the merchandise sold on January 13.
	17	Paid for the purchase of January 2 less the return and discount.
	23	Received payment on account for the sale of January 13 less the discount.

Journalize the entries to record the transactions of Air Systems Company. Refer to the Chart of Accounts for exact wording of account titles.

X

Chart of Accounts

CHART OF ACCOUNTS

Air Systems Company

General Ledger

	ASSETS
110	Cash
120	Accounts Receivable
125	Notes Receivable
130	Merchandise Inventory
140	Office Supplies
141	Store Supplies
142	Prepaid Insurance
180	Land
192	Store Equipment
193	Accumulated Depreciation-Store Equipment
194	Office Equipment
195	Accumulated Depreciation-Office Equipment

	LIABILITIES
210	Accounts Payable
216	Salaries Payable
218	Sales Tax Payable
219	Customer Refunds Payable
220	Unearned Rent
221	Notes Payable

	EQUITY
310	Common Stock
311	Retained Earnings
312	Dividends
313	Income Summary

	REVENUE
410	Sales
610	Rent Revenue

	EXPENSES
510	Purchases
511	Purchases Returns and Allowances
512	Purchases Discounts
513	Freight In
521	Delivery Expense
522	Advertising Expense
524	Depreciation Expense-Store Equipment
525	Depreciation Expense-Office Equipment
526	Salaries Expense
531	Rent Expense
533	Insurance Expense
534	Store Supplies Expense
535	Office Supplies Expense
536	Credit Card Expense
539	Miscellaneous Expense
710	Interest Expense

The following selected transactions were completed by Air Systems Company during January of the current year. Air Systems Company uses the periodic inventory system.

Jan.	2	Purchased $18,200 of merchandise on account, FOB shipping point, terms 2/15, n/30.
	5	Paid freight of $190 on the January 2 purchase.
	6	Returned $2,750 of the merchandise purchased on January 2.
	13	Sold merchandise on account, $37,300, FOB destination, 1/10, n/30. The cost of goods sold was $22,400.
	15	Paid freight of $215 for the merchandise sold on January 13.
	17	Paid for the purchase of January 2 less the return and discount.
	23	Received payment on account for the sale of January 13 less the discount.

Journalize the entries to record the transactions of Air Systems Company. Refer to the Chart of Accounts for exact wording of account titles.

Answer 1

Journal entry :

Date	account & explanation	debit	credit
Jan 2	Merchandise inventory	18200
	Account payable		18200
	(To record purchase)
Jan 5	Merchandise inventory	190
	Cash		190
	(To record freight paid)
Jan 6	Account payable	2750
	Merchandise inventory		2750
	(To record inventory return)
Jan 13	Account payable	37300
	Sales revenue		37300
	Cost of goods sold	22400
	Merchandise inventory		22400
	(To record sales and cost of goods sold)
Jan 15	Cost of goods sold	215
	Cash		215
	(To record freight paid)
Jan 17	Account payable (18200-2750)	15450
	Cash (15450*98%)		15141
	Merchandise inventory (15450*2%)		309
	(To record amount paid)
Jan 23	Cash	36927
	Sales discount (37300*1/100)	373
	Account receivable		37300
	(To record amount received)