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Chapter 5: 1TI (page 325)

Click Computers has the following transactions in July related to the sale of merchandise inventory.

July 12 Sold computers on account for \(8,000 to a customer, terms 3/15, n/30. The cost of the computers is \)4,800. Click uses the gross method for recording sales revenue.

26 Received payment from the customer on balance due.

Journalize the sales transactions for Click Computers assuming the company uses the perpetual inventory system.

Short Answer

Expert verified

The total of debits and credits is$20,800.

Step by step solution

01

Meaning of Sales

In accounting, the term sales refer to the process of transferring the ownership associated with the goods or services. Under such a process, theseller transfers the ownership in the buyer’s favoragainst a predetermined amount of consideration.

02

Preparation of journal entries

Date

Accounts and Explanation

Debit ($)

Credit ($)

Jul 12

Accounts receivable

8,000

Sales revenue

8,000

(To record the sales on account)

Jul 12

Cost of goods sold

4,800

Merchandise inventory

4,800

(To record the cost of goods sold)

Jul 26

Cash

8,000

Accounts receivable

8,000

(To record the receipt of payment)

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Most popular questions from this chapter

Journalize the following sales transactions for Sanborn Camera Store using the periodic inventory system. Explanations are not required.

Dec. 3, Sanborn sold $41,900 of camera equipment on the account; credit terms are 3/15, n/EOM.

17 Sanborn receives payment from the customer on the amount due to less the discount.

Taylor Department Store uses a periodic inventory system. The adjusted trial balance of Taylor Department Store at December 31, 2018, follows:

TAYLOR DEPARTMENT STORE

Adjusted Trial Balance

December 31, 2018

Balance

Account Title Debit Credit

Cash \(7,900

Accounts Receivable 85,300

Merchandise Inventory (beginning) 37,600

Office Supplies 300

Furniture 83,000

Accumulated Depreciation-Furniture \)18,500

Accounts Payable 28,500

Salaries Payable 2,900

Unearned Revenue 14,500

Notes Payable, long-term 32,000

Common Stock 20,000

Retained Earnings 45,400

Dividends 89,000

Sales Revenue 380,800

Purchases 284,000

Purchase Returns and Allowances 110,000

Purchase Discounts 7,000

Freight-In 100

Selling Expense 42,900

Administrative Expense 26,300

Interest Expense 3,200

Total \(659,600 \)659,600

Requirements

1. Prepare Taylor Department Store’s multi-step income statement for the year ended December 31, 2018. Assume ending Merchandise Inventory is $36,700.

2. Journalize Taylor Department Store’s closing entries.

Match the accounting terminology to the definitions.

1. Cost of Goods Sold

a. An inventory system that requires businesses to obtain a physical count of inventory to determine quantities on hand.

2. Perpetual inventory system

b. Expenses, other than the Cost of Goods Sold, that are incurred in the entity’s major ongoing operations.

3. Vendor

c. Excess of Net Sales Revenue over Cost of Goods Sold.

4. Periodic inventory system

d. The cost of merchandise inventory that the business has sold to customers.

5. Operating expenses

e. The individual or business from whom a company purchases goods.

6. Gross profit

f. An inventory system that keeps a running computerized record of merchandise inventory.

Question: Journalize the following transactions that occurred in January 2018 for Mike’s Amusements. Assume Mike’s uses the gross method to record sales revenue. No explanations are needed. Identify each accounts payable and accounts receivable with the vendor or customer name.

Jan. 4 Purchased merchandise inventory on account from Vanderbilt Company, \(5,000. Terms 1/10, n/EOM, FOB shipping point.

6 Paid freight bill of \)150 on January 4 purchase.

8 Returned half the inventory purchased on January 4 from Vanderbilt Company.

10 Sold merchandise inventory for cash, \(1,100. Cost of goods, \)440. FOB destination.

11 Sold merchandise inventory to Gilmore Corporation, \(10,100, on account, terms of 3/10, n/EOM. Cost of goods, \)5,555. FOB shipping point.

12 Paid freight bill of \(30 on January 10 sale.

13 Sold merchandise inventory to Cadet Company, \)8,800, on account, terms of 3/10, n/45. Cost of goods, \(4,400. FOB shipping point.

14 Paid the amount owed on account from January 4, less return and discount.

18 Purchased inventory of \)4,600 on account from Roberts Corporation. Payment terms were 1/10, n/30, FOB destination.

20 Received cash from Gilmore Corporation, less discount.

26 Paid amount owed on account from January 18, less discount.

28 Received cash from Cadet Company.

29 Purchased inventory from Silk Corporation for cash, \(12,000, FOB shipping point. Freight in paid to shipping company, \)240.

Journalize the following transactions that occurred in November 2018 for Julie’s Fun World. No explanations are needed. Identify each accounts payable and accounts receivable with the vendor or customer name. Julie’s Fun World estimates sales returns at the end of each month.

Nov. 4 Purchased merchandise inventory on account from Vera Company, \(5,000. Terms 3/10, n/EOM, FOB shipping point.

6 Paid freight bill of \)100 on November 4 purchase

8 Returned half the inventory purchased on November 4 from Vera Company.

10 Sold merchandise inventory for cash, \(1,100. Cost of goods, \)400. FOB destination.

11 Sold merchandise inventory to Geary Corporation, \(11,100, on account, terms of 2/10, n/EOM. Cost of goods, \)6,105. FOB shipping point.

12 Paid freight bill of \(20 on November 10 sale.

13 Sold merchandise inventory to Caldwell Company, \)9,500, on account, terms of n/45. Cost of goods, \(5,225. FOB shipping point.

14 Paid the amount owed on account from November 4, less return and discount.

17 Received defective inventory as a sales return from the November 13 sale, \)500. Cost of goods, \(275.

18 Purchased inventory of \)3,600 on account from Rainman Corporation. Payment terms were 2/10, n/30, FOB destination.

20 Received cash from Geary Corporation, less discount.

26 Paid amount owed on account from November 18, less discount.

28 Received cash from Caldwell Company, less return.

29 Purchased inventory from Sandra Corporation for cash, \(12,300, FOB shipping point. Freight in paid to shipping company, \)170.
See all solutions

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