Question

sales P5-3A Presented here are selected transactions for Norlan Inc. during September of the current year. Norlan uses a perpetual inventory system. Sept. 2 Purchased equipment on account for $65,000, terms n/30, FOB destination. 3 Freight charges of $950 were paid by the appropriate party on the September 2 purchase of equipment. 4 Purchased supplies for $4,000 cash. 6 Purchased inventory on account from Hillary Corp. at a cost of $65,000, terms 1/15, n/30, FOB shipping point Freight charges of $1,600 were paid by the appropriate party on the September 6 inventory purchase. 8 Returned damaged goods costing $5,000 that were originally purchased from Hillary on September 4. Received a credit on account. 9 Sold goods costing $15,000 to Fischer Limited for $20,000 on account, terms 2/10, n/30, FOB destination. 10 Freight charges of $375 were paid by the appropriate party on the September 9 sale of inventory. 17 Received the balance due from Fischer. 20 Paid Hillary the balance due. 21 Purchased inventory for $6,000 cash. 22 Sold inventory costing $20,000 to Kun-Tai Inc. for $27,000 on account, terms n/30, FOB shipping point 23 Freight charges of $500 were paid by the appropriate party on the September 22 sale of inventory 28 Kun-Tai returned goods sold for $10,000 that cost $7,500. The merchandise was restored to inventory

Answer 1

Journal Entries under Perpetual Inventory System:

Date	Account Titles and Explanations	Debit	Credit
Sep. 2	Equipment	$65,000
	Accounts Payable		$65,000
	(To record the purchase of equipment on account)
Sep. 3	No entry in buyer books, it will be paid and record in seller books due FOB Destination
Sep. 4	Supplies	$4,000
	Cash		$4,000
	(To record the purchase of supplies by cash)
Sep. 6	Inventory	$65,000
	Accounts Payable - Hillary Corp.		$65,000
	(To record the purchase of inventory on account)
Sep. 7	Inventory	$1,600
	Cash		$1,600
	(To record the freight costs included in the invoice)
Sep. 8	Accounts Payable - Hillary Corp.	$5,000
	Inventory		$5,000
	(To record the return of inventory purchased on account)
Sep. 9	Accounts Receivable - Fischer Limited	$20,000
	Sales Revenue		$20,000
	(To record sales on account)
Sep. 9	Cost of Goods Sold	$15,000
	Inventory		$15,000
	(To record the cost of goods sold)
Sep. 10	Freight Charges	$375
	Cash		$375
	(To record the payment of freight charges)
Sep. 17	Cash ($20,000 - $19,600)	$19,600
	Discount on Sales ($20,000 * 2/100)	$400
	Accounts Receivable - Fischer Limited		$20,000
	(To record the receipt of cash from Fischer for credit sales)
Sep. 20	Accounts Payable - Hillary Corp. ($65,000 - $5,000)	$60,000
	Inventory ($60,000*1/100)		$600.00
	Cash ($60,000 - $600)		$59,400
	(To record the payment made to Hillary for credit purchases)
Sep. 21	Inventory	$6,000
	Cash		$6,000
	(To record the purchase of inventory by cash)
Sep. 22	Accounts Receivable - Kun-Tal Inc.	$27,000
	Sales Revenue		$27,000
	(To record sales on account)
Sep. 22	Cost of Goods Sold	$20,000
	Inventory		$20,000
	(To record the cost of goods sold)
Sep. 23	No entry in seller books, it will be paid and record in buyer books due to FOB Shipping point
Sep. 28	Sales Returns and Allowances	$10,000
	Accounts Receivable - Kun-Tal Inc.		$10,000
	(To record the return of inventory sold on account)
	Inventory	$7,500
	Cost of Goods Sold		$7,500
	(To record the cost of goods returned)