Question

Following are the merchandising transactions for Dollar Store:Nov. 1 Dollar Store purchases merchandise for $1,500 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 $90 cash for transportation costs for the November 1 purchase.13 Dollar Store sells merchandise for $1,600 with terms n/30. The cost of the merchandise is $800.16 Merchandise is returned to the Dollar Store from the November 13 transaction. The returned items are priced at $160 and cost $80: 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 and the gross method.

Answer 1

The journal entries are shown below.

Journal entries;

No Date General Journal    Debit Credit

1 1-Nov Merchandise invnetory   1,500  

                             Accounts payable     1,500

2    5-Nov Accounts payable    1,500  

                                        Merchandise inventory    30

                                            cash      1470

3 7-Nov Cash     196  

                               Merchandise inventory    196

4 10-Nov Merchandise inventory   90  

                                        cash      90

5 13-Nov Accounts receivable    1,600  

                                    Sales      1,600

6  cost of goods sold    800  

                           Merchandise inventory    800

7 16-Nov Sales return and allowance   160  

                                Accounts receivable     160

8  merchandise inventory   80  

                           cost of goods sold     80

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