Question

You are now hired by the Sporting Goods store as an accountant. You are asked to enter the following transactions in to the journals With description:

Transaction #1:

December 17: Borrowed $60,000 from First American Bank and Trust by issuing a two-year note payable with a stated annual interest rate of 5%. The check was received from the bank and deposited.

Transaction #2:

December 19: Received customer purchase order in the mail from the University of Southern Iowa (USI) for 100 shoulder pad sets at the price of $75 and 100 knee pads at the price of $30, approved their credit and shipped the goods. All goods ordered were shipped, except only 56 shoulder pad sets were available for shipment. Customer paid for the shipping cost. Invoice was also sent to the customer.

Transaction #3:

December 22: Received merchandise and invoice from Velocity Sporting Goods as listed on the purchase order we sent to them. The invoiced total is $2845. All merchandise listed on PO was delivered in good condition and in the quantities ordered. The goods were immediately placed in the inventory warehouse.

Transaction #4:

December 26: Received the 56 shoulder pads returned from USI (the return has been authorized by your company) for credit against their account balance. The check of payment for the remaining amount (after sales return) was received. The check was deposited.

	ASSETS
10100	Cash
10200	Accounts receivable
10300	Allowance for doubtful accounts
10400	Inventory
10600	Marketable securities
10800	Fixed assets
10900	Accumulated depreciation
	LIABILITIES
20100	Accounts payable
20300	Federal income taxes withheld
20400	State unemployment taxes payable
20500	Federal unemployment taxes payable
20600	F.I.C.A. taxes payable
20700	Federal incomes taxes payable
20900	Interest payable
21000	Notes payable
	STOCKHOLDERS' EQUITY
26000	Common stock
29000	Retained earnings
	REVENUE AND GROSS PROFIT
30100	Sales
30200	Sales returns and allowances
30300	Sales discounts taken
30400	Cost of goods sold
30500	Purchases
30600	Purchases returns and allowances
30700	Purchases discounts taken
30800	Freight-in
31200	Miscellaneous revenue
	EXPENSES
40100	Rent expense
40200	Advertising expense
40300	Office supplies expense
40400	Depreciation expense
40500	Wages and salaries expense
40600	Payroll tax expense
40700	Federal income tax expense
40800	Interest expense
40900	Bad debt expense
41000	Other operating expense

Answer 1

Transaction	Date	General Journal	Debit	Credit
			$	$
1	December 17	Cash	60,000
		Notes Payable		60,000
		Notes issued for cash
2	December 19	Accounts Receivable	7,200
		Sales		7,200
		Sale of inventory on account
3	December 22	Purchases	2,845
		Accounts Payable		2,845
		Purchase of inventory on account
4	December 26	Sales Returns and Allowances	4,200
		Cash	3,000
		Accounts Receivable		7,200
		To record sales return and cash received on account