91Ó°ÊÓ

Journalize the following transactions that occurred in September 2018 for Cardinal. Assume Cardinal 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.

Sep. 3 Purchased merchandise inventory on account from Sherry Wholesalers, \(4,000. Terms 1/15, n/EOM, FOB shipping point.

4 Paid freight bill of \)75 on September 3 purchase.

4 Purchased merchandise inventory for cash of \(1,900.

6 Returned \)1,100 of inventory from September 3 purchase.

8 Sold merchandise inventory to Houston Company, \(5,500, on account. Terms 3/15, n/35. Cost of goods, \)2,365.

9 Purchased merchandise inventory on account from Tarin Wholesalers, \(12,000. Terms 3/10, n/30, FOB destination.

10 Made payment to Sherry Wholesalers for goods purchased on September 3, less return and discount.

13 After negotiations, received a \)200 allowance from Tarin Wholesalers.

15 Sold merchandise inventory to Java Company, \(3,300, on account. Terms 2/10, n/EOM. Cost of goods, \)1,320.

22 Made payment, less allowance, to Tarin Wholesalers for goods purchased on September 9.

25 Sold merchandise inventory to Smecker for \(1,900 on account that cost \)722. Terms of 1/10, n/30 were offered, FOB shipping point. As a courtesy to Smecker, $85 of freight was added to the invoice for which cash was paid by Cardinal.

28 Received payment from Houston Company.

29 Received payment from Smecker, less discount.

30 Received payment from Java Company.

Step by step solution

01

Meaning of Freight

In accounting, the term freight refers to the cost associated with the acquisition of goods delivered by any mode of transportation. Freight expense is generally categorized into two parts-freight-in and freight-out.

02

Preparation of journal entries

Date	Accounts and Explanation	Debit ($)	Credit ($)
Sep 3	Merchandise inventory	4,000
	Accounts payable (Sherry)		4,000
Sep 4	Freight-in	75
	Cash		75
Sep 4	Merchandise inventory	1,900
	Cash		1,900
Sep 6	Accounts payable (Sherry)	1,100
	Merchandise inventory		1,100
Sep 8	Accounts receivable (Houston)	5,500
	Sales revenue		5,500
Sep 8	Cost of goods sold	2,365
	Merchandise inventory		2,365
Sep 9	Merchandise inventory	12,000
	Accounts payable (Tarin)		12,000
Sep 10	Accounts payable (Sherry) [4000-1100]	2,900
	Merchandise inventory (2900*1%)		29
	Cash		2,871
Sep 13	Accounts payable (Tarin)	200
	Purchase returns and allowances		200
Sep 15	Accounts receivable (Java)	3,300
	Sales revenue		3,300
Sep 15	Cost of goods sold	1,320
	Merchandise inventory		1,320
Sep 22	Accounts payable (Tarin) [12000-200]	11,800
	Cash		11,800
Sep 25	Accounts receivable (Smecker)	1,985
	Sales revenue		1,900
	Cash		85
Sep 25	Cost of goods sold	722
	Merchandise inventory		722
Sep 28	Cash	5,500
	Accounts receivable (Houston)		5,500
Sep 29	Cash	1,881
	Sales discount (1900*1%)	19
	Accounts receivable (Smecker) [1900-85]		1,900
Sep 30	Cash	3,300
	Accounts receivable (Java)		3,300

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