Following are the merchandising transactions for Dollar Stor

Following are the merchandising transactions for Dollar Store. Nov. 1 Dollar Store purchases merchandise for $1,200 on terms of 2/5, n/30, FOB shipping point, invoice dated November 1. 5 Dollar Store pays cash for the November 1 purchase. 7 Dollar Store discovers and returns $200 of defective merchandise purchased on November 1, and paid for on November 5, for a cash refund. 10 Dollar Store pays $60 cash for transportation costs for the November 1 purchase. 13 Dollar Store sells merchandise for $1,296 with terms n/30. The cost of the merchandise is $648. 16 Merchandise is returned to the Dollar Store from the November 13 transaction. The returned items are priced at $265 and cost $133 the items were not damaged and were returned to inventory. Journalize the above merchandising transactions for the Dollar Store assuming it uses a perpetual inventory system the gross method.

Solution

DR CR 1-Nov Merchandise inventory 1200 Accounts payable 1200 5-Nov Accounts payable 1200 Merchandise inventory (1200*.02) 24 Cash 1176 7-Nov Cash 196 Merchandise inventory (200*(1-2%)) 196 10-Nov Merchandise inventory 60 Cash 60 13-Nov Accounts receivable 1296 Sales 1296 13-Nov Cost of goods sold 648 Merchandise inventory 648 16-Nov Sales returns and allowances 265 Accounts receivable 265 16-Nov Merchandise inventory 133 Cost of goods sold 133