Question

The following were selected from among the transactions completed by Babcock Company during November of the current year:

Nov. 3 Purchased merchandise on account from Moonlight Co., list price $85,000, trade discount 25%, terms FOB destination, 2/10, n/30.

Nov.4 Sold merchandise for cash, $37,680. The cost of the merchandise sold was $22,600.

Nov. 5 Purchased merchandise on account from Papoose Creek Co., $47,500, terms FOB shipping point, 2/10, n/30, with prepaid freight of $810 added to the invoice.

Nov. 6 Returned $13,500 ($18,000 list price less trade discount of 25%) of merchandise purchased on November 3 from Moonlight Co.

Nov. 8 Sold merchandise on account to Quinn Co., $15,600 with terms n/15. The cost of the merchandise sold was $9,400.

Nov. 13 Paid Moonlight Co. on account for purchase of November 3, less return of November 6.

Nov. 14 Sold merchandise on VISA, $236,000. The cost of the merchandise sold was $140,000.

Nov. 15 Paid Papoose Creek Co. on account for purchase of November 5.

Nov. 23 Received cash on account from sale of November 8 to Quinn Co.

Nov. 24 Sold merchandise on account to Rabel Co., $56,900, terms 1/10, n/30. The cost of the merchandise sold was $34,000.

Nov. 28 Paid VISA service fee of $3,540.

Nov. 30 Paid Quinn Co. a cash refund of $6,000 for returned merchandise from sale of November 8. The cost of the returned merchandise was $3,300.

Journalize the transactions.

Answer 1

Answer:

Babcock Company

Journal Entries:

Nov. 3:

Debit Inventory $63,750

Credit Accounts Payable (Moonlight Co.) $63,750

To record the purchase of goods on account, terms FOB destination, 2/10, n/30.

Nov. 4:

Debit Cash Account $37,680

Credit Sales Revenue $37,680

To record the sale of goods for cash.

Debit Cost of goods sold $22,600

Credit Inventory $22,600

To record the cost of goods sold.

Nov. 5:

Debit Inventory $47,500

Credit Cash (For prepaid freight) $810

Credit Accounts Payable (Papoose Creek Co.) $46,690

To record the purchase of goods on account, terms FOB Shipping point, 2/10, n.30.

Nov. 6:

Debit Accounts Payable (Moonlight Co.) $13,500

Credit Inventory $13,500

To record the return of goods to Moonlight Co.

Nov. 8:

Debit Accounts Receivable (Quinn Co.) $15,600

Credit Sales Revenue $15,600

To record the sale of goods on account, terms n/15.

Debit Cost of goods sold $9,400

Credit Inventory $9,400

To record the cost of goods sold.

Nov. 13:

Debit Accounts Payable (Moonlight Co.) $50,250

Credit Cash Discount $1,005

Credit Cash Account $49,245

To record the payment for goods on account

Nov. 14:

Debit VISA Account $236,000

Credit Sales Revenue $236,000

To record the sale of goods on VISA.

Debit Cost of goods sold $140,000

Credit Inventory $140,000

To record the cost of goods sold.

Nov. 15:

Debit Accounts Payable (Papoose Creek Co.) $46,690

Credit Cash Discount $9,338

Credit Cash Account $37,353

To record the payment on account.

Nov. 23:

Debit Cash Account $15,600

Credit Accounts Receivable (Quinn Co.) $15,600

To record the receipt of cash on account.

Nov. 24:

Debit Accounts Receivable (Rable Co.) $56,900

Credit Sales Revenue $56,900

To record the sale of goods on account, terms 1/10, n/30.

Debit Cost of goods sold $34,000

Credit Inventory $34,000

To record the cost of goods sold.

Nov. 28:

Debit VISA Service Fee Expense $3,540

Credit Cash Account $3,540

To record the payment for VISA service.

Nov. 30:

Debit Inventory $3,300

Credit Cost of goods sold $3,300

To record the return of goods.

Debit Sales Returns $6,000

Credit Accounts Receivable $6,000

To record the return of goods by Quinn Co.

Debit Accounts Receivable $6,000

Credit Cash Account $6,000

To record the refund for returned goods.

Explanation:

Babcock Company uses Journals to record business transactions as they occur on a daily basis.  They provide the needed guidance to ensure that the accounts involved in every business transaction are properly identified and entries are correctly recorded on the correct side of the accounts.  Transactions are recorded following the ubiquitous accounting equation, the accrual concept, and matching principle of generally accepted accounting principles.