Question

I have a test on this and this is study guide. I was not given a answer key. Could someone please create journal entires for the events listed so I can make sure my answers are correct and that im doing this right??

Parts II. Accounting for Merchandising Businesses (20 Points) At the beginning of Year 2, Great Yankees Enterprises had the following balances in its accounts: Cash $16,800 Inventory 4,000 Land 2,000 Common stock 12.000 Retained earnings 10,800 REQUIRED: Record the following events during Year 2 in general journal format Purchased inventory that cost $11,200 on account from Ivey Company under terms 2/10, n/30. The merchandise was delivered FOB shipping point. Freight costs of $800 were paid in cash. Returned $600 of the inventory that it had purchased because the inventory was damaged in transit. The seller agreed to pay the return freight cost. Paid the amount due on its account payable to Ivey Company within the cash discount period. Sold inventory that had cost $8,000 for $13,500. The sale was on account under terms 2/10, n/45. Received merchandise returned from a customer. The merchandise had originally cost $1,200 and had been sold to the customer for $2,100 cash. The customer was paid $2,100 cash for the returned merchandise. Delivered goods in Event 4 FOB destination. Freight costs of $800 were paid in cash.

Answer 1

Great Yankees Enterprises Debit in $ Credit in $ Journal Enteries Date Particulars Year 2 1 Inventory a/c Dr. To Accounts Payable (Inventory on account) 11200 11200 Dr. 800 Freight in a/c To Cash (Freight paid) 800 - 2 Dr. 600 Accounts Payable a/c To Inventory (Inventory returned) 600 Accounts Payable a/c Dr. 10600 To Inventory To Cash (Cash paid to creditors in discount period) 212 10388 13500 Accounts Receivable a/c Dr. To Sales (Sales on account) 13500 8000 Cost of goods sold a/c Dr. To Inventory (To record cost of goods sold) 8000 5 2100 Sales Return a/c Dr. To Accounts Receivable (Goods returned by customer) 2100 1200 Inventory a/c Dr. To Cost of goods sold (Cost of goods sold reversed) 1200 Dr. 800 Freight cost a/c To Cash (Freight paid) 800