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Question
Journalize the following transactions that occurred in February 2018 for Oceanic. No explanations are needed. Identify each accounts payable and accounts receivable with the vendor or customer name. Oceanic estimates sales returns at the end of each month.
Feb. 3 Purchased merchandise inventory on account from Silton Wholesalers, \(5,200. Terms 2/15, n/EOM, FOB shipping point.
4 Paid freight bill of \)70 on February 3 purchase.
4 Purchased merchandise inventory for cash of \(1,500.
6 Returned \)900 of inventory from February 3 purchase.
8 Sold merchandise inventory to Herenda Company, \(5,600, on account. Terms 3/15, n/35. Cost of goods, \)2,352.
9 Purchased merchandise inventory on account from Teddy Wholesalers, \(7,000. Terms 1/10, n/30, FOB destination.
10 Made payment to Silton Wholesalers for goods purchased on February 3, less return and discount.
12 Received payment from Herenda Company, less discount.
13 After negotiations, received a \)500 allowance from Teddy Wholesalers.
15 Sold merchandise inventory to Jordon Company, \(3,400, on account. Terms n/EOM. Cost of goods, \)1,496.
22 Made payment, less allowance, to Teddy Wholesalers for goods purchased on February 9.
23 Jordon Company returned \(1,000 of the merchandise sold on February 15. Cost of goods, \)440.
25 Sold merchandise inventory to Smith for \(1,700 on account that cost \)663. Terms of 2/10, n/30 were offered, FOB shipping point. As a courtesy to Smith, $70 of freight was added to the invoice for which cash was paid by Oceanic.
27 Received payment from Smith, less discount.
28 Received payment from Jordon Company, less return.
Step-by-Step Solution
VerifiedThe total of debit and credit is $52,641.
In accounting, the term sales returns refer to a situation when customers return the goods sold to them, to the business. The major cause of sales returns is defective or damaged goods, and it decreases the sales revenue of the merchandiser.
Date | Accounts and Explanation | Debit ($) | Credit ($) |
2018 |
|
|
|
Feb 3 | Merchandise inventory | 5,200 |
|
| Accounts payable (Silton Wholesalers) |
| 5,200 |
Feb 4 | Merchandise inventory | 70 |
|
| Cash |
| 70 |
Feb 4 | Merchandise inventory | 1,500 |
|
| Cash |
| 1,500 |
Feb 6 | Accounts payable (Silton wholesalers) | 900 |
|
| Merchandise inventory |
| 900 |
Feb 8 | Accounts receivable (Herenda company) | 5,600 |
|
| Sales revenue |
| 5,600 |
Feb 8 | Cost of goods sold | 2,532 |
|
| Merchandise inventory |
| 2,532 |
Feb 9 | Merchandise inventory | 7,000 |
|
| Accounts payable (Teddy Wholesalers) |
| 7,000 |
Feb 10 | Accounts payable (Silton wholesalers) [5,200-900] | 4,300 |
|
| Merchandise inventory (4300*2%) |
| 86 |
| Cash |
| 4,214 |
Feb 12 | Cash | 5,432 |
|
| Sales discount (5600*3%) | 168 |
|
| Accounts receivable (Herenda company) |
| 5,600 |
Feb 13 | Accounts payable (Teddy wholesalers) | 500 |
|
| Merchandise inventory |
| 500 |
Feb 15 | Accounts receivable (Jordon company) | 3,400 |
|
| Sales revenue |
| 3,400 |
Feb 15 | Cost of goods sold | 1,496 |
|
| Merchandise inventory |
| 1,496 |
Feb 22 | Accounts payable (Teddy wholesalers) [7000-500] | 6,500 |
|
| Merchandise inventory (6500*1%) |
| 65 |
| Cash |
| 6,435 |
Feb 23 | Sales returns and allowances | 1,000 |
|
| Accounts receivable (Jordon company) |
| 1,000 |
Feb 23 | Merchandise inventory | 440 |
|
| Cost of goods sold |
| 440 |
Feb 25 | Accounts receivable (Smith) | 1,770 |
|
| Sales revenue |
| 1,700 |
| Cash |
| 70 |
Feb 25 | Cost of goods sold | 663 |
|
| Merchandise inventory |
| 663 |
Feb 27 | Cash | 1,736 |
|
| Sales discount (1700*2%) | 34 |
|
| Accounts receivable (Smith) |
| 1,770 |
Feb 28 | Cash (3400-1000) | 2,400 |
|
| Accounts receivable (Jordan company) |
| 2,400 |