Question

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

1. John's purchased merchandise on account for $5,900. Freight charges of $750 were paid in cash.
2. John’s returned some of the merchandise purchased in (1). The cost of the merchandise was $1,050 and John’s account was credited by the supplier.
3. Merchandise costing $3,250 was sold for $6,100 in cash.

Required:
Prepare the necessary journal entries to record these transactions.

Answer 1

--Required journal entries under PERIODIC system

Accounts title	Debit	Credit
Purchases	$5,900
Accounts payable		$5,900
(to record purchases)
Freight In	$750
Cash		$750
(to record payment of freight)
Accounts Payable	$1,050
Purchase Return & Allowances		$1,050
(to record goods returned)
Cash	$6,100
Sales Revenue		$6,100
(to record sales)