Question

On June 10, Wildhorse Company purchased $9,500 of merchandise on account from Novak Company, FOB shipping point, terms 2/10, n/30. Wildhorse pays the freight costs of $590 on June 11. Damaged goods totaling $350 are returned to Novak for credit on June 12. The fair value of these goods is $75. On June 19, Wildhorse pays Novak Company in full, less the purchase discount. Both companies use a perpetual inventory system.

a. Prepare separate entries for each transaction on the books of Wildhorse Company. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)

Date	Account Titles and Explanation	Debit	Credit
choose a transaction date                                                                      June 10June 11June 12June 19	enter an account title	enter a debit amount	enter a credit amount
	enter an account title	enter a debit amount	enter a credit amount
choose a transaction date                                                                      June 10June 11June 12June 19	enter an account title	enter a debit amount	enter a credit amount
	enter an account title	enter a debit amount	enter a credit amount
choose a transaction date                                                                      June 10June 11June 12June 19	enter an account title	enter a debit amount	enter a credit amount
	enter an account title	enter a debit amount	enter a credit amount
choose a transaction date                                                                      June 10June 11June 12June 19	enter an account title	enter a debit amount	enter a credit amount
	enter an account title	enter a debit amount	enter a credit amount
	enter an account title	enter a debit amount	enter a credit amount

b. Prepare separate entries for each transaction for Novak Company. The merchandise purchased by Wildhorse on June 10 had cost Novak $5,500. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)

Date	Account Titles and Explanation	Debit	Credit
choose a transaction date                                                                      June 10June 11June 12June 19	enter an account title to record credit sale	enter a debit amount	enter a credit amount
	enter an account title to record credit sale	enter a debit amount	enter a credit amount
	(To record credit sale)
choose a transaction date                                                                      June 10June 11June 12June 19	enter an account title to record cost of merchandise sold	enter a debit amount	enter a credit amount
	enter an account title to record cost of merchandise sold	enter a debit amount	enter a credit amount
	(To record cost of merchandise sold)
choose a transaction date                                                                      June 10June 11June 12June 19	enter an account title to record merchandise returned	enter a debit amount	enter a credit amount
	enter an account title to record merchandise returned	enter a debit amount	enter a credit amount
	(To record merchandise returned)
choose a transaction date                                                                      June 10June 11June 12June 19	enter an account title to record cost of merchandise returned	enter a debit amount	enter a credit amount
	enter an account title to record cost of merchandise returned	enter a debit amount	enter a credit amount
	(To record cost of merchandise returned)
choose a transaction date                                                                      June 10June 11June 12June 19	enter an account title	enter a debit amount	enter a credit amount
	enter an account title	enter a debit amount	enter a credit amount
	enter an account title	enter a debit amount

Answer 1

Solution

Entries in the books of Wildhorse Company:

Date	Account Titles and Explanation	Debit	Credit
Jun-10	Merchandise Inventory	$9,500
	Accounts Payable		$9,500
	(To record account purchases)
Jun-11	Merchandise Inventory	$590
	Cash		$590
	(To record freight paid)
Jun-12	Accounts Payable	$350
	Merchandise Inventory		$350
	(To record purchase returns)
Jun-19	Accounts Payable	$9,150
	Merchandise Inventory		$183
	Cash		$8,967
	(To record full payment made and discount of 2%; (9,500 - 350) x 2% = 183; cash = 9,150 -183 = 8,967)

Entries in the books of Novak Company

Date	Account Titles and Explanation	Debit	Credit
Jun-10	Accounts Receivables	$9,500
	Sales		$9,500
	(To record credit sales)
Jun-10	Cost of Goods Sold	$5,500
	Merchandise Inventory		$5,500
	(To record cost of goods sold)
Jun-12	Sales Returns and Allowances	$350
	Accounts Receivables		$350
	(To record merchandise returned)
Jun-12	Merchandise Inventory	$75
	Cost of Goods Sold		$75
	(To record cost of merchandise returned)
Jun-19	Sales Discount	$183
	Cash	$8,967
	Accounts Receivables		$9,150
	(To record payment received less discount; 2% x (9,500 -350) = 183; cash = 9,150 - 8,967)