Question

Mark’s Music is a store that buys and sells musical instruments and uses a perpetual inventory system. Transactions for the business are shown below:

Nov. 2
Purchased two electric guitars from Fender Supply Limited, on account, at a cost of $700 each, terms 1/10, n/60.
4
Made a cash sale of two keyboards for a total invoice price of $2,200. The cost of each keyboard was $700.
5
Received a credit from Western Acoustic Inc. for the return of an acoustic guitar which was defective. The original invoice price was $400 and the guitar had been purchased on account.
7
One of the keyboards from the cash sale of Nov. 4 was returned to the store for a full cash refund because the customer was not satisfied with the instrument.
8
Purchased store supplies from a stationery store. The price of the supplies is $100.
10
Sold one Omega trumpet to the Toronto Regional Band, on account, for an invoice price of $2,700. Terms are 1/10, n/60. The trumpet had cost Mark’s Music $1,420.
10
Made a payment on account for the amount owing to Fender Supply Limited for the purchase of Nov. 2.
13
Purchased two saxophones from Yamaha Canada Inc. on account. The invoice price was $2,100 for each saxophone. Terms are 1/10, n/30.
16
Returned to Yamaha Canada Inc. one of the saxophones purchased on Nov. 13, as it was the wrong model. Received a credit from Yamaha for the full purchase price.
20
Received a cheque for the appropriate amount from Toronto Regional Band for the purchase of Nov. 10.
22
Paid balance owing to Yamaha Canada Inc.

Prepare the journal entries to record the Mark’s Music transactions

Answer 1

Journaal entry for payroll
Date	Accounts title and explanations				Debit $	Credit $
2-Nov	Inventory dr.				1400
	Accounts payable					1400
4-Nov	Cash account Dr.				2200
	Sales revenue					2200
	Cost of good ssold Dr.				1400
	Inventory					1400
5-Nov	Accounts payable Dr.				400
	Inventory					400
7-Nov	Sales return and allowance Dr.				1100
	cash account					1100
	Inventory Account Dr.				700
	Cost of goods sold					700
8-Nov	Supplies Dr.				100
	Accounts payable					100
10-Nov	Accounts receivable Dr.				2700
	Sales revenue					2700
	Cost of good ssold Dr.				1420
	Inventory					1420
10-Nov	Accounts payable Dr.				1400
	Cash account					1386
	Inventory Account(1400*1%)					14
13-Nov	Inventory Account Dr.				4200
	Accounts payable					4200
16-Nov	Accounts payable Dr.				2100
	Inventory account					2100
20-Nov	Cash account Dr. (2700*99%)				2673
	Sales discount Dr. (2700*1%)				27
	Accounts receivable					2700
22-Nov	Accounts payable Dr.				2100
	Cash account					2079
	Inventory Account (2100*1%)					21