5E
Question
Journalize the following transactions for Santa Fe Art Gift Shop. Assume Santa Fe uses the gross method to record sales revenue. Explanations are not required.
Feb. 3 Purchased \(2,800 of merchandise inventory on account under terms 3/10, n/EOM and FOB shipping point.
7 Returned \)700 of defective merchandise purchased on February 3.
9 Paid freight bill of \(400 on February 3 purchase.
10 Sold merchandise inventory on account for \)4,800. Payment terms were 1/15, n/30. These goods cost the company $2,400.
12 Paid amount owed on credit purchase of February 3, less the return and the discount.
28 Received cash from February 10 customer in full settlement of their debt.
Step-by-Step Solution
VerifiedThe total of debits and credits is $18,000.
In accounting, sales revenue refers to the amount of money generated by a business concerned by selling goods or services to the customers. Sales revenue is considered to be an operating income and is the primary source of generating revenues.
Date | Accounts and Explanation | Debit ($) | Credit ($) |
Feb 3 | Merchandise inventory | 2,800 |
|
| Accounts payable |
| 2,800 |
Feb 7 | Accounts payable | 700 |
|
| Merchandise inventory |
| 700 |
Feb 9 | Freight-in | 400 |
|
| Cash |
| 400 |
Feb 10 | Accounts receivable | 4,800 |
|
| Sales revenue |
| 4,800 |
Feb 10 | Cost of goods sold | 2,400 |
|
| Merchandise inventory |
| 2,400 |
Feb 12 | Accounts payable (2800-700) | 2,100 |
|
| Cash |
| 2,037 |
| Merchandise inventory (2100*3%) |
| 63 |
Feb 28 | Cash | 4,800 |
|
| Accounts receivable |
| 4,800 |