Question

Assume that on September 1, Office Depot had an inventory that included a variety of calculators. The company uses a perpetual inventory system. During September, these transactions occurred. Sept. 6 Purchased calculators from Cullumber Co. at a total cost of $1,750, terms n/30. 9 Paid freight of $50 on calculators purchased from Cullumber Co. 10 Returned calculators to Cullumber Co. for $55 credit because they did not meet specifications. 12 Sold calculators costing $600 for $760 to Fryer Book Store, terms n/30. 14 Granted credit of $45 to Fryer Book Store for the return of one calculator that was not ordered. The calculator cost $32. 20 Sold calculators costing $500 for $740 to Heasley Card Shop, terms n/30. Journalize the September transactions. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)

Answer 1

Journal Entries:

Inventory   1,750 debit

         A/P                1,750 credit

--purchase of inventory--

the freight cost are required to obtain the inventory so we capitalize it:

Inventory       50 debit

       Cash                 50 credit

--freight-in on inventory--

the return of goods decreases our debt and inventory:

A/P                55 debit

       Inventory           55 credit

--return of malfunction goods to suppliers--

A/R               760 debit

    Sales Revenue 760 credit

COGS          600 debit

  Inventory            600 credit

--record of the sale to Fryer Book--

the return on sales decreases the customer accounts and, as the calculator is in good condition it can return to inventory and we decrease the COGS

Sales return  45 debit

   A/R                     45 credit

Inventory       32 debit

    COGS                32 credit

--returns from Fryer Book--

A/R               740 debit

    Sales Revenue 740 credit

COGS          500 debit

  Inventory            500 credit

--sale to Heasley Card Shop--

Answer 2

To Journalize the September transactions.

Sept. 6

Dr Inventory $1,750

Cr     Accounts Payable  $1,750

Sept. 9

Dr Inventory $50

Cr  Cash $50

Sept. 10

Dr Accounts Payable $55

Cr     Inventory  $55

Sept. 12

Dr Accounts Receivable $760

Cr     Sales Revenue  $760

Sept. 12

Dr Cost of Goods Sold $600

Cr   Inventory  $600

Sept. 14

Dr Sales Returns and Allowances $45

Cr     Accounts Receivable  $45

Sept. 14

Dr Inventory $32

Cr     Cost of Goods Sold  $32

Sept. 20

Dr Accounts Receivable $740

Cr    Sales Revenue  $740

Sept. 20

Dr Cost of Goods Sold $500

Cr  Inventory  $500

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