3 P54B Journal Entries for Merchandise Transactions Janetto

3 P5-4B. Journal Entries for Merchandise Transactions Janetto Distributing Company uses the perpetual inventory system. Janetto had the following transactions related to merchandise during the month of August: 10 Purchased on account merchandise for resale for $9,000; terms were 2/10, n/30. 12 Paid $350 cash for freight on the August 10 purchase. 16 Returned merchandise costing $800 (part of the $9,000 purchase). 19 Paid for merchandise purchased on August 10. 22 Sold merchandise on account costing $8,000 for $10,000; terms were 2/10, n/30. 25 Customer returned merchandise costing $750 that had been sold on account for $900 Aug. (part of the $10,000 sale). Received payment from customer for merchandise sold on August 22. 31 Required Record each of the transactions related to purchasing and selling merchandise for the Janetto Distribut- ing Company

Solution

Date Journal Entry Debit Credit 10-Aug Merchandise purchse $9,000 To Account payable $9,000 ( Purchase merchanidesed) P&L A/c $9,000 To merchandised Purchased $9,000 ( Purchase booked in PL A/c 10-Aug Freight Paid $350 To cash $350 ( Frieght Paid) P& L A/c Dr. $350 To Frieght paid $350 ( Freight expenditure booked in P&L 16-Aug Account Payable $800 To Merchandise purchase return $800 ( Merchandised purchase return) 19-Aug Account payable $8,200 Discount on Payment as per term $164 Cash $8,036 ( 2% discount on payment made in 10 days from purchase date Discount to supplier $164 P&L A/c $164 ( Discount booked in PL) 22-Aug Customer A/c $10,000 Sale of merchandised $10,000 ( Merchandised was sold to customer on credit Sale of merchandised $10,000 P&L A/c $10,000 (Sale booked in P& A/c) 25-Aug Sale of merchandised $900 Customer A/c $900 ( Sale return by customer) 31-Aug Cash A/c $8,918 Discount to customer $182 Customer A/c $9,100 P&l A/c $182 To Discount to customer $182 ( 2% discount on payment made in 10 days from purchase date