Question

nework 1 CC6-1 Accounting for Merchandising Operations (LO 6-4, LO 6-5, LO 6-6) [The following information applies to the questions displayed below) Nicole's Getaway Spa (NGS) has been so successful that Nicole has decided to expand her spa by selling merchandise She sells things such as nail polish, at-home spa kits, cosmetics, and aromatherapy items. Nicole uses a perpetual Inventory system and is starting to realize all of the work that is created when inventory is involved in a business. The following transactions were selected from among those completed by NGS in August Aug. 2 Sold a bundle of spa services with a merchandise basket. When sold separately, the spa service part of the bundle sells for $476 and the merchandise basket normally sells for $204. Together, the bundle was sold to Val Amy for cash at a selling price of $540 (total). Val booked a spa treatment for August 10, and she took the basket of goods with her. The goods had cost NGS $125. Aur. 3 Sold 5 identical items of merchandise to Cosmetics R Us on account at a selling price of $500 (total), terus n/30. The goods cost NGS $490. Aug. 6 Cosmetics R Us returned one of the five items purchased on August 3. The item could still be sold by NGS in the future and credit was given to the customer. Aug. 10 Val Any used one of the three spa treatments she had purchased as part of the bundle sold to her on August 2 Aug.20 Sold two at-home pa kits to Meghan Witzel for $190 cash The goods cost MGS $141. Aug. 22 Cosmetics R Us paid its remaining account balance in full CC6-1 Part 1 Required: 1. Prepare journal entries for each transaction. No additional sales retums are expected. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list 9 10 of 10 < Prev 1 Next >

Answer 1

1)

Journal Entries:

Date	Account Titles and Explanations	Debit	Credit
Aug. 2	Cash	$540
	Unearned Service Revenue		$540
	(To record the cash received for services to be performed)
Aug. 2	Cost of Goods Sold	$125
	Merchandise Inventory		$125
	(To record the cost of goods sold)
Aug. 3	Accounts Receivable - Cosmetics R Us	$590
	Sales Revenue		$590
	(To record the sales made on account)
Aug. 3	Cost of Goods Sold	$490
	Merchandise Inventory		$490
	(To record the cost of goods sold)
Aug. 6	Sales Returns and Allowance ($590/5 items)	$118
	Accounts Receivable - Cosmetics R Us		$118
	(To record the sales returns)
Aug. 6	Merchandise Inventory	$98
	Cost of Goods Sold ($490/5 items)		$98
	(To record the return of goods sold on account)
Aug. 10	Unearned Service Revenue	$180
	Service Revenue ($540/3 items)		$180
	(To record the services earned for one item)
Aug. 20	Cash	$390
	Sales Revenue		$390
	(To record the cash sales)
Aug. 20	Cost of Goods Sold	$141
	Merchandise Inventory		$141
	(To record the cost of goods sold)
Aug. 22	Cash	$472
	Accounts Receivable - Cosmetics R Us ($590 - $118)		$472
	(To record the collection of cash from credit sales)