Question

Question 3 of 3 < > -/1 Presented below are selected transactions for Blue Spruce Company during September and October of the current year Blue Spruce uses a periodic inventory system. Sept 1 2 5 15 16 17 25 30 Oct 1 2 3 Purchased merchandise on account from Hillary Company at a cost of $54,000, FOB destination, terms 1/15,6/30. The correct company paid $2,000 of freight charges to Trucking Company on the September 1 merchandise purchase Returned for credit $2,600 of damaged goods purchased from Hillary Company on September 1 Sold the remaining merchandise purchased from Hillary Company to Irvine Company for $102,800, terms 2/10, 1/30, FOB destination The correct company paid $1,800 of freight charges on the September 15 sale of merchandise Issued Irvine Company a credit of $5,200 for returned goods. These goods had cost Blue Spruce Company $3,000 and were returned to inventory Received the balance owing from Irvine Company for the September 15 sale. Pald Hillary Company the balance owing for the September 1 purchase. Purchased merchandise on account from Kimmel Company at a cost of $62,000, terms 2/10, 1/30, FOB shipping point The correct company paid freight costs of $1,100 on the October 1 purchase. Obtained a purchase allowance of $2,700 from Kimmel Company to compensate for some minor damage to goods purchased on October 1 Paid Kimmel Company the amount owing on the October 1 purchase Sold all of the merchandise purchased from Kimmel Company to Kieso Company for $118,500, terms 2/10, 1/30, FOB shipping point The correct company paid $800 freight costs on the October 11 sale. Issued Kieso Company a sales allowance of $2,100 because some of the goods did not meet Klesa's exact specifications Received a cheque from Kieso Company for the balance owing on the October 11 sale. 10 11 12 17 31 Record the September and October transactions for Blue Spruce Company Assume that Norlar uses the earnings approach. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter for the amounts. Record journal entries in the order presented in the problem.) O BI

Answer 1

Answer:

Blue Spruce Company

Journal entries

Date	Account Title and Explanation	Debit $	Credit $
Sept.1	Inventory	54,000
	Account payable		54,000
	(To record purchases)
Sept. 2	No Entry, will be done in Blue Spruce books as freight is paid by vendor
Sept. 5	Account payable	2,600
	Inventory		2,600
	(To record purchase return)
Sept. 15	Accounts Receivable	102,800
	Sale		102,800
	(To record sale)
	Cost of goods sold (54,000 - 2,600)	51,400
	Inventory		51,400
	(To record cost of goods sold)
Sept. 16	Freight outward Expense	1,800
	Cash		1,800
	(To record freight expense as sale of FOB destination)
Sept. 17	Sales return and allowance	5,200
	Accounts Receivable		5,200
	(To record sale return)
	Inventory	3,000
	Cost of goods sold		3,000
	(To record cost of goods returned)
Sept. 25	Cash	95,648
	Sales discount ($97,600*2%)	1,952
	Accounts Receivable ($70,000-$5,700)		97,600
	(To record amount received)
Sept.30	Accounts Payable-Hillary ($54,000-$2,600)	51,400
	Cash		51,400
	(To record cash payment)
Oct. 1	Inventory	62,000
	Accounts Payable		62,000
	(To record purchases)
Oct. 2	Inventory	1,100
	Cash		1,100
	(To record freight expense paid)
Oct. 3	Accounts Payable	2,700
	Inventory		2,700
	(To record purchase allowance)
Oct. 10	Accounts Payable ($62,000 - $2,700)	59,300
	Inventory ($59,300*2%)		1,186
	Cash		58,114
	(To record cash payment)
Oct. 11	Accounts Receivable	118,500
	Sale		118,500
	(To record sale)
	Cost of goods sold (62,000+1100-2700-1186)	59,214
	Inventory		59,214
	(To record cost of goods sold)
Oct. 12	No entry as freight paid by purchaser
Oct. 17	Sales return and allowance	2,100
	Accounts Receivable		2,100
	(To record sale Allowance)
Oct.31	Cash	116,400
	Accounts Receivable ($118,500-$2,100)		116,400
	(To record amount received)

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