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Chapter 5: Q4SE (page 296)

Journalize the following sales transactions for Salem Sportswear. Explanations are not required. The company estimates sales returns at the end of each month.

Jul. 1 Salem sold \(20,000 of men’s sportswear for cash. Cost of goods sold is \)10,000.

3 Salem sold \(62,000 of women’s sportswear on account, credit terms are 3/10, n/30. Cost of goods is \)31,000.

5 Salem received a \(4,500 sales return on damaged goods from the customer on July 1. Cost of goods damaged is \)2,250.

10 Salem receives payment from the customer on the amount due, less discount.

Short Answer

Expert verified

Answer

The total of debits and credits is$188,030.

Step by step solution

01

Meaning of Sales Transactions

In accounting, the events associated with the transfer ofownershipare termed sales transactions. In the process of sales, the ownership of goods and services is transferred in favor of the buyer/purchaser from the seller.

02

Journal entries for sales transactions

Date

Accounts and Explanation

Debit ($)

Credit ($)

Jul 1

Cash

20,000

Sales revenue

20,000

(To record the cash sales)

Jul 1

Cost of goods sold

10,000

Merchandise inventory

10,000

(To record the cost of goods sold)

Jul 3

Accounts receivable (62,000*3%)

60,140

Merchandise inventory

60,140

(To record the sales on account)

Jul 3

Cost of goods sold

31,000

Merchandise inventory

31,000

(To record the cost of goods sold)

Jul 5

Refunds payable

4,500

Cash

4,500

(To record the sales return)

Jul 5

Merchandise inventory

2,250

Estimated returns inventory

2,250

(To record the cogs of returned inventory)

Jul 10

Cash

60,140

Accounts receivable

60,140

(To record the receipt of payment)

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Most popular questions from this chapter

Crazy Cookies earned net sales revenue of \(66,000,000 in 2018. The cost of goods sold was \)39,600,000, and net income reached $7,000,000, the company’s highest ever. Compute the company’s gross profit percentage for 2018.

Highlight the differences in the closing process when using the periodic inventory system rather than the perpetual inventory system.

Journalize the following sales transactions for Morris Supply. Explanations are not required.

Mar. 1 Morris Supply sold merchandise inventory for \(3,000. The cost of the inventory was \)1,800. The customer paid cash. Morris Supply was running a promotion, and the customer received a \(150 award at the time of sale that can be used at a future date on any Morris Supply merchandise.

3 Sold \)6,000 of supplies on account. Credit terms are 2/10, n/45, FOB destination. The cost of goods is \(3,600.

10 Received payment from the customer on the amount due from March 3, less the discount.

Apr. 15 The customer used the \)150 award when purchasing merchandise inventory for \(200; the inventory cost was \)120. The customer paid cash.

What are the two types of merchandisers? How do they differ?

Triton Department Store uses a periodic inventory system. The adjusted trial balance of Triton Department Store at December 31, 2018, follows:

TRITON DEPARTMENT STORE

Adjusted Trial Balance

December 31, 2018

Balance

Account Title Debit Credit

Cash \(8,200

Accounts Receivable 84,600

Merchandise Inventory (beginning) 37,800

Office Supplies 850

Furniture 86,000

Accumulated Depreciation-Furniture \)18,500

Accounts Payable 29,400

Salaries Payable 2,300

Unearned Revenue 14,900

Notes Payable, long-term 36,000

Common Stock 60,000

Retained Earnings 22,850

Dividends 88,600

Sales Revenue 374,000

Purchases 295,000

Purchase Returns and Allowances 109,000

Purchase Discounts 6,400

Freight-In 300

Selling Expense 41,700

Administrative Expense 26,600

Interest Expense 3,700

Total \(673,350 \)673,350

Requirements

1. Prepare Triton Department Store’s multi-step income statement for the year ended December 31, 2018. Assume ending Merchandise Inventory is $36,300.

2. Journalize Triton Department Store’s closing entries.
See all solutions

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