Question

24 Journalizing purchase and sales transactions Journalize the following transactions for Soul A following transactions for Soul Art Gift Shop. Explanations are not required. 7 9 10 Purchased $3,300 of merchandise inventory on account under terms 3/10, n/EOM and FOB shipping point. Returned $900 of defective merchandise purchased on February 3. Paid freight bill of $400 on February 3 purchase. Sold merchandise inventory on account for $4,700. Payment terms were 2/15, n/30. These goods cost the company $2,350. Paid amount owed on credit purchase of February 3, less the return and the discount. Received cash from February 10 customer in full settlement of their debt. 12 28

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Naming convention is not available, can be slightly different: Explanation in blue can be ignored for Solution: input if not required by question: Journal entries Account title and explaination Merchandise Inventory Accounts Payable (To record the purchase on account) Accounts Payable Merchandise Inventory (To record the purchase return) Merchandise Inventory Cash Debit Date Credit Feb.03 $3,300 $3,300 Feb.07 $ 900 900 Feb.09 400 400 (To record the freight) Accounts Receivable Sales Revenue (To record the sales revenue) Cost of goods sold Merchandise Inventory Feb.10 $ 4,700 4,700 $ 2,350 $ 2,350 (To record the COGS) Accounts Payable Merchandise Inventory Cash (To record the payment on account) Cash Accounts Receivable $ 2,400 Feb.12 (3300-900) (2400*3%) (plug) $ 2,328 Feb.28 $ 4,700 $ 4,700 (To record the collection on account) 72