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Chapter 5: 1SE (page 325)

Journalize the following sales transactions for Paul Sportswear. Explanations are not required.

Aug. 1 Paul sold \(66,000 of women’s sportswear on account, credit terms are 2/10, n/30. Cost of goods is \)33,000. Paul uses the gross method to record sales revenue.

25 Paul receives payment from the customer on the amount due.

Short Answer

Expert verified

The total of debits and credits is$165,000.

Step by step solution

01

Meaning of Accounts Receivable

The accounting term accounts receivable indicates the customers to whom sales are made on acredit basis, and the amount is yet to be received. It is considered an asset and reported under thecurrent asset section of thepositional statement.

02

Preparation of journal entries

Date

Accounts and Explanation

Debit ($)

Credit ($)

Aug 1

Accounts receivable

66,000

Sales revenue

66,000

Aug 1

Cost of goods sold

33,000

Merchandise inventory

33,000

Aug 25

Cash

66,000

Accounts receivable

66,000

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Most popular questions from this chapter

Journalize the following transactions that occurred in March 2018 for Double Company. Assume Double uses the periodic inventory system. No explanations are needed. Identify each accounts payable and accounts receivable with the vendor or customer name. Double estimates sales returns at the end of each month.

Mar. 3 Purchased merchandise inventory on account from Sidecki Wholesalers, \(5,500. Terms 2/15, n/EOM, FOB shipping point.

4 Paid freight bill of \)70 on March 3 purchase.

4 Purchased merchandise inventory for cash of \(1,100.

6 Returned \)900 of inventory from March 3 purchase.

8 Sold merchandise inventory to Herrick Company, \(3,400, on account. Terms 1/15, n/35.

9 Purchased merchandise inventory on account from Tex Wholesalers, \)5,600. Terms 2/10, n/30, FOB destination.

10 Made payment to Sidecki Wholesalers for goods purchased on March 3, less return and discount.

12 Received payment from Herrick Company, less discount.

13 After negotiations, received a \(500 allowance from Tex Wholesalers.

15 Sold merchandise inventory to Jesper Company, \)1,700, on account. Terms n/EOM.

22 Made payment, less allowance, to Tex Wholesalers for goods purchased on March 9.

23 Jesper Company returned \(300 of the merchandise sold on March 15.

25 Sold merchandise inventory to Salter for \)1,000 on account. Terms of 1/10, n/30 was offered, FOB shipping point.

29 Received payment from Salter, less discount.

30 Received payment from Jesper Company, less return.

Is an adjusting entry needed for inventory shrinkage when using the periodic inventory system? Explain.

Consider the following transactions for Garman Packing Supplies:

Apr. 10 Garman Packing Supplies buys \(175,000 worth of merchandise inventory on account with credit terms of 1/10, n/30.

12 Garman returns \)15,200 of the merchandise to the vendor due to damage during shipment.

19 Garman paid the amount due, less the return and discount.

Requirements

1. Journalize the purchase transactions assuming Garman Packing Supplies uses the periodic inventory system. Explanations are not required.

2. What is the amount of net purchases?

Camilia Communications reported the following figures from its adjusted trial balance for its first year of business, which ended on July 31, 2018:

Cash \( 2,900 Cost of Goods Sold \) 18,700

Selling Expenses 1,400 Equipment, net 9,500

Accounts Payable 4,300 Accrued Liabilities 1,800

Common Stock 4,365 Net Sales Revenue 29,200

Notes Payable, long-term 500 Accounts Receivable 3,200

Merchandise Inventory 1,100 Interest Expense 65

Administrative Expenses 3,300

Requirements

1. Prepare Camilia Communication’s statement of retained earnings for the year ended July 31, 2018. Assume that there were no dividends declared during the year and that the business began on August 1, 2017.

2. Prepare Camilia Communication’s classified balance sheet at July 31, 2018. Use the report format.

What are the four steps involved in the closing process for a merchandising company?
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