Question

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Littleton Books has the following transactions during May.

May 2 Purchases books on account from Readers Wholesale for $2,500, terms 2/10, n/30.
May 3 Pays cash for freight costs of $120 on books purchased from Readers.
May 5 Returns books with a cost of $250 to Readers because part of the order is incorrect.
May 10 Pays the full amount due to Readers.
May 30 Sells all books purchased on May 2 (less those returned on May 5) for $3,200 on account.

2. Record the period-end adjustment to cost of goods sold on May 31, assuming the company has no beginning or ending inventory. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

		JOURNAL   ENTRY
	Date	Account	Debit	Credit
	May,2	Purchase	$2,500
		Accounts Payable		$2,500
	May,3	Freight in	$120
		Cash		$120
	May,5	Accounts payable	$250
		Purchase returns		$250
	May,10	Accounts payable	$2,250		(2500-250)
		Purchase discount		$45	(2250*0.02)
		Cash		$2,205	(2250-45)
	May,30	Sales Revenue	$3,200
		Accounts receivable		$3,200
	2	PERIOD END ADJUSTMENTS
		Beginning Inventory		$0
		Purchase		$2,500
		Freight in		$120
		Purchase Returns	$250
		Purchase Discount	$45
		Ending Inventory	$0
		Cost of goods sold	$2,325