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Chapter 5: Q4SE (page 296)

Journalize the following sales transactions for Salem Sportswear. Explanations are not required. The company estimates sales returns at the end of each month.

Jul. 1 Salem sold \(20,000 of men鈥檚 sportswear for cash. Cost of goods sold is \)10,000.

3 Salem sold \(62,000 of women鈥檚 sportswear on account, credit terms are 3/10, n/30. Cost of goods is \)31,000.

5 Salem received a \(4,500 sales return on damaged goods from the customer on July 1. Cost of goods damaged is \)2,250.

10 Salem receives payment from the customer on the amount due, less discount.

Short Answer

Expert verified

Answer

The total of debits and credits is$188,030.

Step by step solution

01

Meaning of Sales Transactions

In accounting, the events associated with the transfer ofownershipare termed sales transactions. In the process of sales, the ownership of goods and services is transferred in favor of the buyer/purchaser from the seller.

02

Journal entries for sales transactions

Date

Accounts and Explanation

Debit ($)

Credit ($)

Jul 1

Cash

20,000

Sales revenue

20,000

(To record the cash sales)

Jul 1

Cost of goods sold

10,000

Merchandise inventory

10,000

(To record the cost of goods sold)

Jul 3

Accounts receivable (62,000*3%)

60,140

Merchandise inventory

60,140

(To record the sales on account)

Jul 3

Cost of goods sold

31,000

Merchandise inventory

31,000

(To record the cost of goods sold)

Jul 5

Refunds payable

4,500

Cash

4,500

(To record the sales return)

Jul 5

Merchandise inventory

2,250

Estimated returns inventory

2,250

(To record the cogs of returned inventory)

Jul 10

Cash

60,140

Accounts receivable

60,140

(To record the receipt of payment)

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Most popular questions from this chapter

What are the two journal entries involved when recording the sale of inventory when using the perpetual inventory system?

Rae Philippe was a warehouse manager for Atkins Oilfield Supply, a business that operated across eight Western states. She was an old pro and had known most of the other warehouse managers for many years. Around December each year, auditors would come to do a physical count of the inventory at each warehouse. Recently, Rae鈥檚 brother started his own drilling company and persuaded Rae to 鈥渓oan鈥� him 80 joints of 5-inch drill pipe to use for his first well. He promised to have it back to Rae by December, but the well encountered problems and the pipe was still in the ground. Rae knew the auditors were on the way, so she called her friend Andy, who ran another Atkins warehouse. 鈥淪end me over 80 joints of 5-inch pipe tomorrow, and I鈥檒l get them back to you ASAP,鈥� said Rae. When the auditors came, all the pipe on the books was accounted for, and they filed a 鈥渘o-exception鈥� report.

Requirements

1. Is there anything the company or the auditors could do in the future to detect this kind of fraudulent practice?

2. How would this kind of action affect the financial performance of the company?

D & T Printing Supplies鈥� accounting records include the following accounts at December 31, 2018.

Purchases \( 185,200 Accumulated Depreciation鈥擝uilding \) 21,000

Accounts Payable 7,700 Cash 18,100

Rent Expense 8,600 Sales Revenue 257,800

Building 42,800 Depreciation Expense鈥擝uilding 4,700

Common Stock 55,000 Dividends 26,500

Retained Earnings 30,400 Interest Expense 1,900

Merchandise Inventory,

Beginning 119,000 Merchandise Inventory,

Ending 102,100

Notes Payable 11,300 Purchase Returns and Allowances 20,700

Purchase Discounts 2,900

Requirements

1. Journalize the required closing entries for D & T Printing Supplies assuming that D & T uses the periodic inventory system.

2. Determine the ending balance in the Retained Earnings account.

The unadjusted trial balance for Trudel Electronics Company at March 31, 2018, follows:

TRUDEL ELECTRONICS COMPANY

Unadjusted Trial Balance

March 31, 2018

Balance

Account Title Debit Credit

Cash \(4,000

Accounts Receivable 38,800

Merchandise Inventory 45,500

Office Supplies 6,500

Equipment 130,000

Accumulated Depreciation-Equipment \)36,800

Accounts Payable 17,400

Unearned revenue 13,200

Notes Payable, long-term 48,000

Common Stock 60,000

Retained Earnings 100

Dividends 20,000

Sales Revenue 282,500

Cost of Goods Sold 160,600

Salaries Expense (Selling) 20,000

Rent Expense (Selling) 15,800

Salaries Expenses (Administrative) 5,700

Utilities Expenses (Administrative) 11,100

Total \(458,000 \)458,000

Requirements

1. Journalize the adjusting entries using the following data:

a. Interest revenue accrued, \(200.

b. Salaries (Selling) accrued, \)2,300.

c. Depreciation Expense鈥擡quipment (Administrative), \(1,300.

d. Interest expense accrued, \)1,500.

e. A physical count of inventory was completed. The ending Merchandise Inventory should have a balance of \(45,200.

f. Trudel estimates that approximately \)6,000 of merchandise sold will be returned with a cost of $1,200.

2. Prepare Trudel Electronics鈥檚 adjusted trial balance as of March 31, 2018.

3. Prepare Trudel Electronics鈥檚 multi-step income statement for year ended March 31, 2018.

Emerson St. Book Shop鈥檚 unadjusted Merchandise Inventory at June 30, 2018 was \(5,200. The cost associated with the physical count of inventory on hand on June 30, 2018, was \)4,900. In addition, Emerson St. Book Shop estimated approximately \(1,000 of merchandise sold will be returned with a cost of \)400.

Requirements

1. Journalize the adjustment for inventory shrinkage.

2. Journalize the adjustment for estimated sales returns.
See all solutions

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