QA5C-4E - Horngren'S Financial And Managerial Accounting

Question

Question: Journalize the following sales transactions for Austin Mall. Assume Austin Mall uses the gross method to record sales revenue. Explanations are not required. 

Jan. 4 Sold \(10,000 of antiques on account, credit terms are 1/15, n/30. Cost of goods is \)5,000. 

20 Austin Mall received payment from the customer on the amount due from Jan. 4. 

20 Sold \(5,200 of antiques on account, credit terms are 1/10, n/45, FOB destination. Cost of goods is \)2,600. 

20 Austin Mall paid $120 on freight out. 

29 Received payment from the customer on the amount due from Jan. 20, less the discount.

 

Step-by-Step Solution

Answer

Answer

The total of debits and credits is $38,120.

Step 1: Meaning of Transaction

The occurrence of any event in the business is called a transaction in accounting terms. A transaction must be measurable in monetary terms to be recorded in the books of accounts because accounting records only financial transactions according to the money measurement principle.

Step 2: Preparation of journal entries

Date	Accounts and Explanation	Debit ($)	Credit ($)
Jan 4	Accounts receivable	10,000
	Sales revenue		10,000
Jan 4	Cost of goods sold	5,000
	Merchandise inventory		5,000
Jan 20	Cash	10,000
	Accounts receivable		10,000
Jan 20	Accounts receivable	5,200
	Sales revenue		5,200
Jan 20	Cost of goods sold	2,600
	Merchandise inventory		2,600
Jan 20	Delivery expense	120
	Cash		120
Jan 29	Cash	5,148
	Sales discount (5200*1%)	52
	Accounts receivable		5,200