Question

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

1. John’s purchased merchandise on account for $6,100. Freight charges of $850 were paid in cash.
2. John’s returned some of the merchandise purchased in (1). The cost of the merchandise was $1,150 and John’s account was credited by the supplier.
3. Merchandise costing $3,350 was sold for $6,300 in cash.

Required:
Prepare the necessary journal entries to record these transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

Journal Entries

Serial number	Accounts Title and Explanation	Debit	Credit
(1)	Inventory	6,950
	Accounts Payable		6,100
	Cash		850
	[Inventory purchased on account and freight charges paid in cash ]
(2)	Accounts Payable	1,150
	Inventory		1,150
	[Goods returned to the supplier ]
(3)	Cash	6,300
	Cost of goods sold	3,350
	Sales Revenue		6,300
	Inventory		3,350
	[Goods sold for cash ]

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