Question

White Co. is an auto parts wholesaler which uses a perpetual inventory system. The company records its purchases at net cost and sales at full invoice price. Prepare journal entries (no explanations needed) for the following transactions.

• 10/5: White sold 150 Charge-Up batteries on account to Black, Inc. The total invoice price is $40 per battery ($6,000 total); terms of 2/10,n/30. The cost of the batteries to White is $25 each ($3,750 total).
• 10/7: White accepted 20 batteries returned from Black. The amount is to be deducted from the balance due.
• 10/15: White received payment of the balance due from Black.

Answer 1

Journal

White Co.

Date. Particular. Debit. Credit

10/5. Accounts receivable. 6000

To sales. 6000

(to record sales on account)

10/5. Cost of good sold. 3750

To inventory. 3750

(to record sale of inventory)

10/7. Sales return.(20 units *40) 800

To Accounts receivable. 800

(to record sales return)

10/7. Inventory. (20 units*25). 500

To Cost of good sold. 500

(to record return of inventory)

10/15. Cash 5096

Discount paid(5200*2%). 104

To Accounts receivable. 5200

(to record receipt of payment)