Question

Brief Exercise 6-34 Recording Purchase and Sales Transactions Raymond Company and Geeslin Company both use a perpetual inventory system. The following transactions occurred during the month of January: Jan. 1 8 10 30 Raymond purchased $5,000 of merchandise on account from Geeslin with credit terms of 2/10, n/30. The cost of the merchandise was $3,750. Assume that Geeslin uses the net method to record sales discounts. Raymond returned $500 of themerchandise to Geeslin. The cost of the merchandise returned was $375. Raymond paid invoices totaling $3,000 to Geeslin for the merchandise purchased on January 1. Raymond paid Geeslin the balance due. Required: For a compound transaction, if an amount box does not require an entry, leave it blank. Prepare the journal entries to record these transactions on the books of Raymond. Jan. 1 Inventory 5,000 Accounts Payable 5,000 (Purchased inventory on credit) Jan. 8 Accounts Payable 500 Inventory 500 (Returned merchandise) Jan, 10 Accounts Payable 3,000 Cash 2.940 60 Purchase Discounts X 1 (Recorded payment within discount period) Jan. 30 Accounts Payable 1,500 1,500 Cash ✓ (Recorded payment outside of discount period) Feedback Check My Work Consider whether the transaction is from the perspective of the buyer or seller. From the buyer's perspective, the historical cost principle implies that inventory cost will include the purchase price of the inventory plus any cost of bringing entries—one to record the revenue portion of the transaction and one to record the expense (and inventory) portion of the transaction. Prepare the journal entries to record these transactions on the books of Geeslin. Jan. 1 Accounts Receivable 5,000 Sales Revenue 15,000 x (Record sale to customer) Jan. 1 Cost of Goods Sold 3,750 3,750 Inventory (Recorded cost of merchandise sold)

Answer 1

In the books of Raymond
General Journal
Date	Journal	DR	CR
01-Jan	Inventory	$                                                                                                  5,000.00
	To Accounts Payable		$                                                     5,000.00
	(Amount of merchandise inventory purchased on account from Geeslin Company term 2/10,n/30)
08-Jan	Accounts Payable	$                                                                                                      500.00
	To Inventory		$                                                        500.00
	(Amount of purchases returned)
10-Jan	Accounts Payable	$                                                                                                  3,000.00
	To Cash=(3000*98%)		$                                                     2,940.00
	To Merchandise Inventory($3000*2%)		$                                                           60.00
	(Amount paid to Geeslin Company after considering 2% discount)	$                                                                                                      640.00
30-Jan	Accounts Payable($5000-$500-$3000)	$                                                                                                  1,500.00
	To Cash		$                                                     1,500.00
	(Amount of balance paid after the discounting period,so no discount )
In the books of Geeslin
General Journal
Date	Journal	Amount (DR)	Amount (CR)
01-Jan	Accounts Receivable($5000*98%)	$                                                                                                  4,900.00
	To Sales		$                                                     4,900.00
	(Sales on account to Raymond company net of sales method)
01-Jan	Cost of goods sold	$                                                                                                      500.00
	To Inventory		$                                                        500.00
	(Cost of goods sold)
08-Jan	Sales Return($500*98%)	$                                                                                                      490.00
	To Accounts Receivable		$                                                        490.00
	(Amount of sales return)
08-Jan	Inventory
	To Cost of goods sold
	(Amount of Merchandise inventory returned by customer)
10-Jan	Cash($3000*98%)	$                                                                                                  2,940.00
	To Accounts Receivable		$                                                     2,940.00
	(Amount of Cash received from Customer within discount period)
30-Jan	Cash	$                                                                                                  1,500.00
	To Accounts Receivable		$                                                     1,470.00
	To Sales discount forfeited		$                                                           30.00
	(Amount not paid by Raymond within discount period)