Question

Journalize the following transactions for Soul Art Gift Shop. Explanations are not required.

Feb. 3 Purchased \(3,300 of merchandise inventory under terms 3/10, n/EOM, and FOB shipping point.

7 Returned \)900 of defective merchandise purchased on February 3.

9 Paid freight bill of \(400 on February 3 purchase.

10 Sold merchandise inventory on account for \)4,700. Payment terms were 2/15, n/30. These goods cost the company $2,350.

12 Paid amount owed on credit purchase of February 3, less the return and the discount.

28 Received cash from February 10 customer in full settlement of their debt.

Short answer

The total of debits and credits is$18,750.

Step-by-step solution

Meaning of Journalizing

In accounting, the term journalizing refers to recording a business’s financial transactions in the books of accounts. The journalizing process is applicable where the management adopts thedouble-entry bookkeeping format of accounting.

Preparation of journal entries

Date	Accounts and Explanation	Debit ($)	Credit ($)
Feb 3	Merchandise inventory	3,300
	Accounts payable		3,300
Feb 7	Accounts payable	900
	Merchandise inventory		900
Feb 9	Freight-in	400
	Cash		400
Feb 10	Accounts receivable	4,700
	Sales revenue		4,700
Feb 10	Cost of goods sold	2,350
	Merchandise inventory		2,350
Feb 12	Accounts payable (3300-900)	2,400
	Cash (2400-3%*2400)		2,328
	Merchandise inventory		72
Feb 28	Cash	4,606
	Sales discount (2%*4700)	94
	Accounts receivable		4,700