Question

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Exercise 3. Serene Spa Sales uses the perpetual inventory system and the gross method of accounting for purchases and sales and had the following transactions during August Aug 1 Sold merchandise on credit for $5,000, terms 3/10, n/30. The items sold had a cost of $3,500. 3 Purchased merchandise for cash, $2,720. Purchased merchandise on credit for $2,600, terms 1/20, n/30. Customer returns $3,000 of merchandise purchased July 20. The returned items had a cost of $2,010. The returned items are restored to inventory and the customer's Accounts Receivable is credited. 10 Received payment for merchandise sold August 1. Granted an allowance from the seller for the return of defective merchandise purchased on August 4 for $600. Paid freight charges of $200 for merchandise ordered last month. (FOB shipping point) Paid for the merchandise purchased August 4 less the portion that was returned. 24 Sold merchandise on credit for $7,000, terms 2/10, n/30. The items had a cost of $4,900. 31 Received payment for merchandise sold on August 24. Required: Prepare the general journal entries to record these transactions

Answer 1

Answer -

Journal of Serene Spa Sales

Date	Particulars	Debit ($)	Credit ($)
August 1	Accounts Receivable Sales (Sold merchandise having a cost of $3500, on credit)	5000 -	- 5000
August 1	Cost of Goods Sold Merchandise Inventory (Merchandise transferred)	3500 -	- 3500
August 3	Merchandise Inventory Cash (Purchased merchandise on cash)	2720 -	- 2720
August 4	Merchandise Inventory Accounts Payable (Purchased merchandise on credit)	2600 -	- 2600
August 5	Sales Returns and Allowances Accounts Receivable (Sales Returns recorded)	3000 -	- 3000
August 5	Merchandise Inventory Cost of Goods Sold (Merchandise Inventory adjusted for sales Returns)	2010 -	- 2010
August 10	Cash [ $5000 - $150 ] Sales Discounts [ $5000 * 3% ] Accounts Receivable (Payment Received recorded)	4850 150 -	- - 5000
August 15	Accounts Payable Merchandise Inventory (Returned merchandise to seller)	600 -	- 600
August 18	Merchandise Inventory Cash (Paid freight recorded)	200 -	- 200
August 23	Accounts Payable Merchandise Inventory [ $2000 * 1% ] Cash [ $2000 - $20 ] (Paid for the merchandise purchased)	2000 - -	- 20 1980
August 24	Accounts Receivable Sales (Sold merchandise having a cost of $4900, on credit)	7000 -	- 7000
August 24	Cost of Goods Sold Merchandise Inventory (Merchandise transferred)	4900 -	- 4900
August 31	Cash [ $7000 - $140 ] Sales Discounts [ $7000 * 2% ] Accounts Receivable	6860 140 -	- - 7000
Total		45530	45530