Question

Following are the merchandising transactions for Dollar Store. Nov. 1 Dollar Store purchases merchandise for $1,200 on terms of 2/5, n/30, FOB shipping point, invoice dated November 1. 5 Dollar Store pays cash for the November 1 purchase. 7 Dollar Store discovers and returns $200 of defective merchandise purchased on November 1, and paid for on November 5, for a cash refund. 10 Dollar Store pays $60 cash for transportation costs for the November 1 purchase. 13 Dollar Store sells merchandise for $1,296 with terms n/30. The cost of the merchandise is $648. 16 Merchandise is returned to the Dollar Store from the November 13 transaction. The returned items are priced at $265 and cost $133; the items were not damaged and were returned to inventory. Journalize the above merchandising transactions for the Dollar Store assuming it uses a perpetual inventory system the gross method.

Answer 1

		DR	CR
1-Nov	Merchandise inventory	1200
	Accounts payable		1200
5-Nov	Accounts payable	1200
	Merchandise inventory (1200*.02)		24
	Cash		1176
7-Nov	Cash	196
	Merchandise inventory (200*(1-2%))		196
10-Nov	Merchandise inventory	60
	Cash		60
13-Nov	Accounts receivable	1296
	Sales		1296
13-Nov	Cost of goods sold	648
	Merchandise inventory		648
16-Nov	Sales returns and allowances	265
	Accounts receivable		265
16-Nov	Merchandise inventory	133
	Cost of goods sold		133