Question

John’s Specialty Store uses a perpetual inventory system. The following are some inventory transactions for the month of May 2018:

John’s purchased merchandise on account for $6,500. Freight charges of $1,050 were paid in cash.

John’s returned some of the merchandise purchased in (1). The cost of the merchandise was $1,350 and John’s account was credited by the supplier.

Merchandise costing $3,550 was sold for $6,700 in cash.

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

1.) Record the merchandise purchased on account for $6,500

2.) Record the freight charges of $1,050.

3.) Record the return of merchandise costing $1,350

4.) Record the sale of merchandise of $6,700 in cash

Answer 1

Transaction	Accounts title	Debit	Credit
1	Merchandise Inventory	$6,500
	Accounts payable		$6,500
	(inventory purchased on account)
2	Merchandise Inventory	$1,050
	Cash		$1,050
	(freight paid)
3	Accounts Payable	$1,350
	Merchandise Inventory		$1,350
	(inventory returned)
4 [i]	Cash	$6,700
	Sales Revenue		$6,700
	(sales in Cash)
4 [ii]	Cost of Goods Sold	$3,550
	Merchandise Inventory		$3,550
	(Cost of inventory sold recorded)