Question

Posting journal entry

160 Chapter 6 Accounting for Merchandising Businesses Illustrative Problem The following transactions were completed by Montrose Company during May of the current year. Montrose Compan y uses a perpetual inventory system. Purchased merchandise on account from Floyd Co., $4,000, terms FOB ship- ping point, 2/10, n/30, with prepaid freight of $120 added to the invoice. Purchased merchandise on account from Kramer Co., $8,500, terms FOB May 3. May 5. destination, 1/10, n/30. 6. Sold merchandise on account to C.F.Howell Co., list price $4,000, trade dis- count 30%, terms 2/10, n/30. The cost of the merchandise sold was si,125. 8. Purchased office supplies for cash, $150 10. Returned merchandise purchased on May 5 from Kramer Co., $1,300. 13. Paid Floyd Co. on account for purchase of May 3, less discount. 14. 15. Purchased merchandise for cash, $10,500. Paid Kramer Co. on account for purchase of May 5, less return of May 10 16. Received cash on account from sale of May 6 to C. F. Howell Co., less 19. Sold merchandise on MasterCard credit cards, $2,450. The cost of the mer- 22. Sold merchandise on account to Comer Co., $3,480, terms 2/10, n/30. The 24. Sold merchandise for cash, $4,350. The cost of the merchandise sold was 25. Received merchandise returned by Comer Co. from sale on May 22, S1A80 31. Paid a service processing fee of $140 for MasterCard sales and discount. discount. chandise sold was $980 cost of the merchandise sold was $1,400 $1,750. The cost of the returned merchandise was $600. 2. 1. If

Answer 1

SOLUTION:

		Debit	Credit
May-03	Merchandise Inventory	4,120
	Accounts Payable–Floyd Co.		4,120
May-05	Merchandise Inventory	8,500
	Accounts Payable–Kramer Co.		8,500
May-06	Accounts Receivable–C. F. Howell Co.	2,800
	Sales		2,800
	($4,000 - (30% * $4,000) = $2,800
May-06	Cost of Merchandise Sold	1,125
	Merchandise Inventory		1,125
May-08	Office Supplies	150
	Cash		150
May-10	Accounts Payable–Kramer Co.	1,300
	Merchandise Inventory		1,300
May-13	Accounts Payable–Floyd Co.	4,120
	Merchandise Inventory		40
	Cash		4,040
	(2% x $4,000 = $80; $4,000 - $80+$120 = $4,040
May-14	Merchandise Inventory	10,500
	Cash
May-15	Accounts Payable–Kramer Co.	7,200
	Merchandise Inventory		72
	Cash		7,128
	(8,500 -1,300) x 1% = $72; $8,500 - $1,300 - $72 = $7,128
May-16	Cash	2,744
	Sales Discounts	56
	Accounts Receivable–C. F. Howell Co.		2,800
	$2,800 * 2% = $56; $2,800 - $56 = $2,744
May-19	Accounts Receivable–American Express	2,450
	Sales		2,450
May-19	Cost of Merchandise Sold	980
	Merchandise Inventory		980
May-22	Accounts Receivable–Comer Co.	3,480
	Sales		3,480
May-22	Cost of Merchandise Sold	1,400
	Merchandise Inventory		1,400
May-24	Cash	4,350
	Sales		4,350
May-25	Sales Returns and Allowances	1,480
	Accounts Receivable–Comer Co.		1,480
May-25	Merchandise Inventory	600
	Cost of Merchandise Sold		600
May-31	Cash	2,310
	Credit Card Expense	140
	Accounts Receivable–American Express		2,450