Question

John’s Specialty Store uses a perpetual inventory system. The following are some inventory transactions for the month of May 2018:

John’s purchased merchandise on account for $6,800. Freight charges of $1,200 were paid in cash.

John’s returned some of the merchandise purchased in (1). The cost of the merchandise was $1,500 and John’s account was credited by the supplier.

Merchandise costing $3,700 was sold for $7,000 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.)

1. Record the merchandise purchased on account for $6,800.

2. Record the freight charges of $1,200.

3.Record the return of merchandise costing $1,500.

4.Record the sale of merchandise for $7,000 in cash.

5. Record the cost of goods sold for $3,700.

Answer 1

Journal entry :

No	Account & explanation	debit	credit
1	Merchandise inventory	6800
	Account payable		6800
	(To record purchase)
2	Merchandise inventory	1200
	Cash		1200
	(TO record freight paid)
3	Account payable	1500
	Merchandise inventory		1500
	(To record return)
4	Cash	7000
	Sales revenue		7000
	(To record Sales)
5	Cost of goods sold	3700
	Merchandise inventory		3700
	(TO record cost of goods sold)