Question

Journalize the following transactions for the Evans Company. Assume the company uses a perpetual inventory system.

a. Sold merchandise for $645 cash. The cost of goods sold was $375.
b. Sold merchandise for $432 and accepted VISA as the form of payment. The cost of goods sold was $195.
c. Sold merchandise on account for $670. The cost of goods sold was $438.
d. Paid credit card fees for the

Answer 1

Answer:

Part a

Cash $645 (debit)

Cost of Sales $375 (debt)

Sales Revenue $645 (credit)

Merchandise $375 (credit)

Part b

Cash $432 (debit)

Cost of Sales $195 (debt)

Sales Revenue $432 (credit)

Merchandise $195 (credit)

Part c

Trade Receivables $670 (debit)

Cost of Sales $438 (debt)

Sales Revenue $670 (credit)

Merchandise $438 (credit)

Explanation:

The Perpetual Inventory system keeps record of the value of stock and records the cost of goods sold after every transaction. This is contrary to the the periodic inventory system which measures stock and cost of sales after a period.

For the Journal entries, note that we are recording from the perspective of Evans Company.