91Ó°ÊÓ

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

Jan. 4 Purchased merchandise inventory on account from Vanderbilt Company, \(7,000. Terms 1/10, n/EOM, FOB shipping point.

6 Paid freight bill of \)100 on January 4 purchase.

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

10 Sold merchandise inventory for cash, \(1,600. Cost of goods, \)640. FOB destination.

11 Sold merchandise inventory to Graceland Corporation, \(10,800, on account, terms of 1/10, n/EOM. Cost of goods, \)5,400. FOB shipping point.

12 Paid freight bill of \(60 on January 10 sale.

13 Sold merchandise inventory to Cabbell 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 January 4, less return and discount.

17 Received defective inventory as a sales return from the January 13 sale, \)600. Cost of goods, \(300.

18 Purchased inventory of \)4,600 on account from Roberts Corporation. Payment terms were 3/10, n/30, FOB destination.

20 Received cash from Graceland Corporation, less discount.

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

28 Received cash from Cabbell Company, less return.

29 Purchased inventory from Sandra Corporation for cash, \(11,600, FOB shipping point. Freight in paid to shipping company, \)240.

Step by step solution

01

Meaning of Sales Allowances

In accounting, the term sales allowances refer to the specialreduction provided by the seller in the price list of the goods to its customers on retaining the inappropriate goods. Here,inappropriate goods mean the discrepancy between goods ordered and goods received.

02

Preparation of journal entries

Date	Accounts and Explanation	Debit ($)	Credit ($)
2018
Jan 4	Merchandise inventory	7,000
	Accounts payable (Vanderbilt company)		7,000
Jan 6	Merchandise inventory	100
	Cash		100
Jan 8	Accounts payable (Vanderbilt company)	3,500
	Merchandise inventory		3,500
Jan 10	Cash	1,600
	Sales revenue		1,600
Jan 10	Cost of goods sold	640
	Merchandise inventory		640
Jan 11	Accounts receivable (Graceland Corp)	10,800
	Sales revenue		10,8000
Jan 11	Cost of goods sold	5,400
	Merchandise inventory		5,400
Jan 12	Delivery expense	60
	Cash		60
Jan 13	Accounts receivable (Cabbell company)	9,500
	Sales revenue		9,500
Jan 13	Cost of goods sold	5,225
	Merchandise inventory		5,225
Jan 14	Accounts payable (Vanderbilt company) [7000-3500]	3,500
	Cash		3,465
	Merchandise inventory (3500*1%)		35
Jan 17	Sales returns and allowances	600
	Accounts receivable (Cabbell company)		600
Jan 17	Merchandise inventory	300
	Cost of goods sold		300
Jan 18	Merchandise inventory	4,600
	Accounts payable (Roberts corp.)		4,600
Jan 20	Cash	10,692
	Sales discount (10800*1%)	108
	Accounts receivable (Graceland corp.)		10,800
Jan 26	Accounts payable (Roberts corp.)	4,600
	Merchandise inventory (4600*3%)		138
	Cash		4,462
Jan 28	Cash (9500-600)	8,900
	Accounts receivable (Cabbell company)		8,900
Jan 29	Merchandise inventory	11,600
	Cash		11,600
Jan 29	Merchandise inventory	240
	Cash		240

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