Question

Burn Bright is a boutique store in Sydney specializing in scented candles. Lara, the store owner , purchases the candles for $22 each and sells them to the public for $39 each. The periodic inventory system is used to account for all stock. The following transactions took place during June 2016

June 5: Lara purchased 15 candles on credit from CandleCo Pty Ltd, terms 5/14, n/30 and EXW Sydney. Freight cost of $20 was paid.

June 7: A customer purchased 4 candles for cash from Burn Bright as gifts for their teachers

June 13: Lara returned 5 candles originally purchased on June 5 due to a crack in the glass

June 17: Lara paid the balance owning to CandleCo Pty Ltd

Required:

Complete the general journal entries for Burning Bright for the month of June. Include narrations

Show the Subsidiary Ledger (Accounts Payable) of CandleCo Pty Ltd for the month of June as it would appear in the accounts of Burn Bright. CandleCo Pty’s account had an opening balance of zero.

Answer 1

Solution:

Journal Entries - Burn Bright
Date	Particulars	Debit	Credit
5-Jun-16	Purchases Dr (15*$22)	$330.00
	To Accounts Payable - Candle Co Pty Ltd		$330.00
	(To record purchase on credit)
5-Jun-16	Freight In Dr	$20.00
	To Cash		$20.00
	(To record freight payment)
7-Jun-16	Cash Dr	$156.00
	To Sales Revenue		$156.00
	(To record sale of candles)
13-Jun-16	Accounts Payable - Candle Co Pty Ltd Dr	$110.00
	To Purchase return and allowances		$110.00
	(To record purchase returns)
17-Jun-16	Accounts Payable - Candle Co Pty Ltd Dr	$220.00
	To Purchase discount		$11.00
	To Cash		$209.00
	(To record payment to supplier)

Accounts Payable - Candle Co Pty Ltd
Date	Particulars	Debit	Date	Particulars	Credit
13-Jun-16	To Purchase return and allowances	$110.00	5-Jun-16	By Purchases	$330.00
17-Jun-16	To Cash	$209.00
17-Jun-16	To Purchase Discount	$11.00
	Total	$330.00		Total	$330.00