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Chapter 5: Q30E (page 304)

Journalize the following sales transactions for Straight Shot Archery using the periodic inventory system. Explanations are not required. The company estimates sales returns and allowances at the end of each month.

Aug. 1 Sold \(6,500 of equipment on the account; credit terms are 1/10, n/30.

8 Straight Shot received payment from the customer on the amount due from August 1, less the discount.

15 Sold \)3,100 of equipment on the account; credit terms are n/45, FOB destination.

15 Straight Shot paid \(90 on freight out.

20 Straight Shot negotiated a \)500 allowance on the goods sold on August 15.

24 Received payment from the customer on the amount due from August 15, less the allowance.

Short Answer

Expert verified

The total of debits and credits is$19,290.

Step by step solution

01

Meaning of Discount

In accounting, the term discount refers to the reduction in the price of a product or service provided by the seller with a motive to receive immediate payments from the buyers. Discount is considered an expense for the seller and other revenue for the buyer.

02

Preparation of journal entries

Date

Accounts and Explanation

Debit ($)

Credit ($)

Aug 1

Accounts receivable

6,500

Sales

6,500

Aug 8

Cash

6,435

Sales discount (6500*1%)

65

Accounts receivable

6,500

Aug 15

Accounts receivable

3,100

Sales

3,100

Aug 15

Freight-out

90

Cash

90

Aug 20

Sales returns and allowances

500

Accounts receivables

500

Aug 24

Cash

2,600

Accounts receivable (3100-500)

2,600

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Most popular questions from this chapter

What is a purchase return? How does a purchase allowance differ from a purchase return?

Describe the single-step income statement.

Consider the following transactions for Toys and More:

May 8 Toys and More buys \(113,300 worth of MegoBlock toys on account with credit terms of 2/10, n/60.

12 Toys and More returns \)11,250 of the merchandise to MegoBlock due to damage during shipment.

15 Toys and More paid the amount due, less the return and discount.

Requirements

1. Journalize the purchase transactions. Explanations are not required.

2. In the final analysis, how much did the inventory cost Toys and More?

Journalize the following sales transactions for Morris Supply. Explanations are not required.

Mar. 1 Morris Supply sold merchandise inventory for \(3,000. The cost of the inventory was \)1,800. The customer paid cash. Morris Supply was running a promotion, and the customer received a \(150 award at the time of sale that can be used at a future date on any Morris Supply merchandise.

3 Sold \)6,000 of supplies on account. Credit terms are 2/10, n/45, FOB destination. The cost of goods is \(3,600.

10 Received payment from the customer on the amount due from March 3, less the discount.

Apr. 15 The customer used the \)150 award when purchasing merchandise inventory for \(200; the inventory cost was \)120. The customer paid cash.

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.

26 Received payment from the customer on the balance due.

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

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