Question

The following selected transactions were completed during August between Summit Company and Beartooth Co.: Aug. 1 Summit Company sold merchandise on account to Beartooth Co., $43,500, terms FOB destination, 2/15, n/eom. The cost of the goods sold was $29,330. 2 Summit Company paid freight of $1,110 for delivery of merchandise sold to Beartooth Co. on August 1. 5 Summit Company sold merchandise on account to Beartooth Co., $69,400, terms FOB shipping point, n/eom. The cost of the goods sold was $42,440. 9 Beartooth Co. paid freight of $2,310 on August 5 purchase from Summit Company. 15 Summit Company sold merchandise on account to Beartooth Co., $61,000, terms FOB shipping point, 1/10, n/30. Summit Company paid freight of $1,555, which was added to the invoice. The cost of the goods sold was $37,780. 16 Beartooth Co. paid Summit Company for purchase of August 1. 25 Beartooth Co. paid Summit Company on account for purchase of August 15. 31 Beartooth Co. paid Summit Company on account for purchase of August 5. Journalize the August transactions for (1) Summit Company and (2) Beartooth Co. Refer to the Chart of Accounts of the appropriate company for exact wording of account titles.

Answer 1

Solution 1:

Summit Company
Date	Account Title	Debit	credit
01-Aug	Accounts Receivable	$43,500
	Sales Revenue		$43,500
	Cost of goods sold	$29,330
	Inventory		$29,330
02-Aug	Freight-out	$1,110
	Cash		$1,110
05-Aug	Accounts Receivable	$69,400
	Sales Revenue		$69,400
	Cost of goods sold	$42,440
	Inventory		$42,440
09-Aug	No entry required (as terms are FOB Shipping)
15-Aug	Accounts Receivable	$62,555
	Cash (Freight)		$1,555
	Sales Revenue		$61,000
	Cost of goods sold	$37,780
	Inventory		$37,780
16-Aug	Cash	$42,630
	Sales Discount ($43500*2%)	$870
	Accounts Receivable		$43,500
25-Aug	Cash	$61,945
	Sales Discount (61000*1%)	$610
	Accounts Receivable		$62,555
31-Aug	Cash	$69,400
	Accounts Receivable		$69,400

Solution 2:

Beartooth Co.
Date	Account Title	Debit	credit
01-Aug	Inventory	$43,500
	Accounts Payable		$43,500
02-Aug	No entry required (as terms are FOB Destination)
05-Aug	Inventory	$69,400
	Accounts Payable		$69,400
09-Aug	Inventory	$2,310
	Cash		$2,310
15-Aug	Inventory (59500+1755)	$62,555
	Accounts Payable		$62,555
16-Aug	Accounts Payable	$43,500
	Inventory (43500*2%)		$870
	Cash		$42,630
25-Aug	Accounts Payable	$62,555
	Inventory (61000*1%)		$610
	Cash		$61,945
31-Aug	Accounts Payable	$69,400
	Cash		$69,400