Question

Chapter 5: Journal Entries for a Retail Business

Prepare journal entries for the following August transactions at the Moore Company:

August   1     Purchased merchandise on account from Norris, Inc., $4,000, terms 2/10, n/30.

                5     Sold merchandise to Denton Company, $5,500 on account. The cost of the merchandise is $4,100.

                7     Returned $800 of merchandise purchased August 1 from Norris, Inc. because it was defective.

                       Norris approved the return.

                8     Purchased goods from Chambers, Inc., FOB shipping point, with a price of $9,000, 1/10, n/30.

                       Shipping costs are $300.

                9     Sold merchandise to Baker Company, FOB shipping point, with a price of $12,000, 2/10, n/45.

                       Shipping costs are $350. Cost of the goods are $6000.

              10     Returned merchandise to Chambers, Inc. (see August 8 entry), $2,300. Chambers approves this.

              11     Paid Norris, Inc. the amount owed, less the return on August 7.

              15     Received payment from Denton Company (see August 5 entry).

              17     Baker Company returned merchandise, $ 1,700. Cost of the returned merchandise, $650.

              18     Paid Chambers, Inc., less the return on August 10.

              19     Received payment from Baker Company, less return on August 17.    

Date	Description	Post Ref	Debit	Credit

Answer 1

Answer:

Date	Account Name	Post Ref.	Debit	Credit
Aug.01	Merchandise Inventory		$         4,000
	Account payable			$           4,000
Aug.05	Account receivable		5,500
	Sales			5,500
	Cost of goods sold		4,100
	Merchandise Inventory			4,100
Aug.07	Account payable		800
	Merchandise Inventory			800
Aug.08	Merchandise Inventory		$         9,000
	Account payable			$           9,000
Aug.08	Merchandise Inventory (shipping cost)		$             300
	Cash			$              300
Aug.09	Account receivable		12,000
	Sales			12,000
	Cost of goods sold		6,000
	Merchandise Inventory			6,000
Aug.10	Account payable		2,300
	Merchandise Inventory			2,300
Aug.11	Account payable		3,200
	Cash			3,136
	Merchandise Inventory (3,200*2%)			64
Aug.15	Cash		5,500
	Account receivable			5,500
Aug.17	Sales return and allowances		1,700
	Cash			1,700
	Merchandise Inventory		650
	Cost of goods sold			650
Aug.18	Account payable		6,700
	Cash			6,633
	Merchandise Inventory			67
Aug.19	Sales discount (10,300*2%)		206
	Cash		10,094
	Account receivable			10,300