Question

The following selected transactions were completed during August between Summit Company and Beartooth Co.: Aug. 1 Summit Company sold merchandise on account to Beartooth Co., $48,000, terms FOB destination, 2/15, n/eom. The cost of the goods sold was $28,800. 2 Summit Company paid freight of $1,150 for delivery of merchandise sold to Beartooth Co. on August 1. 5 Summit Company sold merchandise on account to Beartooth Co., $66,000, terms FOB shipping point, n/eom. The cost of the goods sold was $40,000. Beartooth Co. paid freight of $2,300 on August 5 purchase from Summit 9 Company. 15 Summit Company sold merchandise on account to Beartooth Co., $58,700, terms FOB shipping point, 1/10, n/30. Summit Company paid freight of $1,675, which was added to the invoice. The cost of the goods sold was $35,000. 16 Beartooth Co. paid Summit Company for purchase of August 1. 25 Beartooth Co. paid Summit Company on account for purchase of August 15. 31 Beartooth Co. paid Summit Company on account for purchase of August 5. Journalize the August transactions for (1) Summit Company and (2) Beartooth Co. Refer to the Chart of Accounts of the appropriate company for exact wording of account titles.

Answer 1

Summit:

Date	Account title and Explanation	Debit	Credit
Aug.1	Accounts receivable-Beartooth Company	$48,000
	Sales		$48,000
	[To record credit sales]
	Cost of goods sold	$28,800
	Inventory		$28,800
	[To record cost of goods sold]
Aug.2	Delivery expense	$1,150
	Cash		$1,150
	[To record payment of freight]
Aug.5	Accounts receivable-Beartooth Company	$66,000
	Sales		$66,000
	[To record credit sales]
	Cost of goods sold	$40,000
	Inventory		$40,000
	[To record cost of goods sold]
Aug.9	No entry
Aug.15	Accounts receivable-Beartooth Company [58700+1675]	$60,375
	Sales		$58,700
	Cash		$1,675
	[To record credit sales and payment of freight on behalf of Beartooth]]
	Cost of goods sold	$35,000
	Inventory		$35,000
	[To record cost of goods sold]
Aug.16	Cash	$47,040
	Sales discount [48000 x 2%]	$960
	Accounts receivable-Beartooth Company		$48,000
	[To record collections from customers]
Aug.25	Cash	$59,788
	Sales discount [58,700 x 1%]	$587
	Accounts receivable-Beartooth Company		$60,375
	[To record collections from customers]
Aug.31	Cash	$66,000
	Accounts receivable-Beartooth Company		$66,000
	[To record collections from customers]

Beartooth:

Date	Account title and Explanation	Debit	Credit
Aug.1	Inventory	$48,000
	Accounts payable-Summit Company		$48,000
	[To record purchase of inventory on account]
Aug.2	No Entry
Aug.5	Inventory	$66,000
	Accounts payable-Summit Company		$66,000
	[To record purchase of inventory on account]
Aug.9	Inventory	$2,300
	Cash		$2,300
	[To record payment of freight]
Aug.15	Inventory [58700+1675]	$60,375
	Accounts payable-Summit Company		$60,375
	[To record purchase of inventory on account]
Aug.16	Accounts payable-Summit Company	$48,000
	Inventory [48000 x 2%]		$960
	Cash		$47,040
	[To record cash paid for accounts payable]
Aug.25	Accounts payable-Summit Company	$60,375
	Inventory [58,700 x 1%]		$587
	Cash		$59,788
	[To record cash paid for accounts payable]
Aug.31	Accounts payable-Summit Company	$66,000
	Cash		$66,000
	[To record cash paid for accounts payable]