Question

Prepare the journal entries to record the following transactions on Blossom Company's books using a perpetual inventory system. (If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.) 

(a) On March 2, Kingbird Company sold $850,000 of merchandise to Blossom Company on account, terms 2/10, n/30. The cost of the merchandise sold was $500,000. 

(b) On March 6, Blossom Company returned $100,000 of the merchandise purchased on March 2. The cost of the merchandise returned was $60,000. 

(c) On March 12, Kingbird Company received the balance due from Blossom Company. 

Answer 1

Solution

No	Date	General Journal	Debit	Credit
(a)	Mar-02	Accounts receivable	$ 850,000.00
		Sales revenue		$ 850,000.00
		(to record sale of merchandise on account)
	Mar-02	Cost of goods sold	$ 500,000.00
		Inventory		$ 500,000.00
		(To record cost of goods sold on account)
(b)	Mar-06	Purchase returns	$ 100,000.00
		Accounts receivable		$ 100,000.00
		(To record allowances provided)
	Mar-06	Inventory	$    60,000.00
		Cost of goods sold		$    60,000.00
		(To record inventory returned)
(c)	Mar-12	Cash	$ 735,000.00
		Purchase discount	$    15,000.00
		Accounts receivable		$ 750,000.00
		(to record collection from receivables)