Ready-Set-Go,Ltd distribute suitcase to retail stories and extends credit terms of 1/10,n/30 to all of its customers. At the end of June,Ready-Set-Go's inventory consisted of suitcase costing of 1,200 birr. During the month of July, the following merchandising transactions occurred.
July 1.purchased suitcase on account for 1,620 birr from Trunk Manufactureers, FOB destination terms 2/10,n/30. The appropriate party also made a cash payment of 100birr for freight on this date
July 3. Sold suitcase on account to satchel world for 2,200 birr, the cost of suitcase sold was 1,400 birr.
July 9. Paid Trunk manufacturer in full
July 12. Received payment in full from satchel world
July 17. Sold suitcase on account to Lady GoGo for 1,400 birr. The cost of suitcase sold was 1,030birr
July 18. Purchased suitcase on account for 1,900 birr from holiday manufacturers ,FOB shipping points 1/10, n/30. The appropriate party also made a cash payment of 125 birr for freight on this date.
July 20. Received 300 birr credit(including freight) suitcase returned holiday manufacturer.
July 21. Received payment in full from Lady GoGo.
July 22. Sold suitcase on account to Vagabond for 2,400 birr. The cost of suitcase sold was 1,350 birr.
July 30. paid holiday manufacturer in full.
July 31. Granted Vagabond 300 birr crefit for suitcase returned costing 120 birr.
INSTRUCTIONS
Journalize the transaction for the month of July for Ready-Set-Go.Ltd,using perpetual inventory system
July 1:
Purchases 1,620
Accounts Payable 1,620
(To record the purchase of suitcase from Trunk Manufacturers on account)
Transportation In 100
Cash 100
(To record payment of freight)
July 3:
Accounts Receivable 2,200
Sales 2,200
(To record the sale of suitcase on account to Satchel World)
Cost of Goods Sold 1,400
Inventory 1,400
(To record the cost of the goods sold)
July 9:
Accounts Payable 1,620
Cash 1,620
(To record payment to Trunk Manufacturer)
July 12:
Cash 2,200
Accounts Receivable 2,200
(To record the receipt of payment from Satchel World)
July 17:
Accounts Receivable 1,400
Sales 1,400
(To record the sale of suitcase on account to Lady GoGo)
Cost of Goods Sold 1,030
Inventory 1,030
(To record the cost of the goods sold)
July 18:
Purchases 1,900
Accounts Payable 1,900
(To record the purchase of suitcase from Holiday Manufacturers on account)
Transportation In 125
Cash 125
(To record payment of freight)
July 20:
Accounts Payable 300
Purchases 300
(To record the return of suitcase to Holiday Manufacturers)
July 21:
Cash 1,400
Accounts Receivable 1,400
(To record the receipt of payment from Lady GoGo)
July 22:
Accounts Receivable 2,400
Sales 2,400
(To record the sale of suitcase on account to Vagabond)
Cost of Goods Sold 1,350
Inventory 1,350
(To record the cost of the goods sold)
July 30:
Accounts Payable 1,725
Cash 1,725
(To record payment to Holiday Manufacturers)
July 31:
Sales Returns and Allowances 300
Accounts Receivable 300
(To record the return of suitcase from Vagabond)
Inventory 120
Cost of Goods Sold 120
(To record the return of suitcase from Vagabond)
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Here are the journal entries for the transactions that occurred in July for Ready-Set-Go, Ltd, using the perpetual inventory system:
1. July 1:
Accounts Payable (Trunk Manufacturers) 1,620 birr
Inventory 1,520 birr
Cash 100 birr
To record the purchase of suitcases on account from Trunk Manufacturers, including freight
2. July 3:
Accounts Receivable (Satchel World) 2,200 birr
Sales Revenue 2,200 birr
Cost of Goods Sold 1,400 birr
Inventory 1,400 birr
To record the sale of suitcases on account to Satchel World
3. July 12:
Accounts Receivable (Satchel World) 2,200 birr
Cash 2,200 birr
To record the receipt of payment in full from Satchel World
4. July 17:
Accounts Receivable (Lady GoGo) 1,400 birr
Sales Revenue 1,400 birr
Cost of Goods Sold 1,030 birr
Inventory 1,030 birr
To record the sale of suitcases on account to Lady GoGo
5. July 18:
Accounts Payable (Holiday Manufacturers) 1,900 birr
Inventory 1,775 birr
Cash 125 birr
To record the purchase of suitcases on account from Holiday Manufacturers, including freight
6. July 20:
Accounts Payable (Holiday Manufacturers) 1,775 birr
Inventory 1,775 birr
To record the return of suitcases to Holiday Manufacturers, including freight
7. July 21:
Accounts Receivable (Lady GoGo) 1,400 birr
Cash 1,400 birr
To record the receipt of payment in full from Lady GoGo
8. July 22:
Accounts Receivable (Vagabond) 2,400 birr
Sales Revenue 2,400 birr
Cost of Goods Sold 1,350 birr
Inventory 1,350 birr
To record the sale of suitcases on account to Vagabond
9. July 31:
Accounts Receivable (Vagabond) 300 birr
Sales Returns and Allowances 300 birr
Cost of Goods Sold 120 birr
Inventory 120 birr
To record the return of suitcases from Vagabond
All other transactions, such as payment to Trunk Manufacturers and Holiday Manufacturers, are not recorded since they are cash transactions and do not affect the balance of the inventory account.
To journalize the transactions for the month of July for Ready-Set-Go, Ltd using the perpetual inventory system, we need to record each transaction in the journal. Here are the journal entries for each transaction:
1. July 1:
Accounts Payable (Trunk Manufacturers) 1,620 birr
Inventory 1,620 birr
Notes:
- The company purchased suitcases on account from Trunk Manufacturers with a cost of 1,620 birr.
- The inventory account is debited to record the increase in inventory.
2. July 1:
Freight Expense 100 birr
Cash 100 birr
Notes:
- The company made a cash payment of 100 birr for freight.
3. July 3:
Accounts Receivable (Satchel World) 2,200 birr
Sales Revenue 2,200 birr
Cost of Goods Sold 1,400 birr
Inventory 1,400 birr
Notes:
- The company sold suitcases on account to Satchel World for 2,200 birr.
- The sales revenue account is credited to record the increase in sales.
- The cost of goods sold is debited to record the cost of the items sold.
- The inventory account is credited to record the decrease in inventory.
4. July 9:
Accounts Payable (Trunk Manufacturers) 1,620 birr
Cash 1,620 birr
Notes:
- The company paid Trunk Manufacturers in full.
5. July 12:
Cash 2,200 birr
Accounts Receivable (Satchel World) 2,200 birr
Notes:
- The company received payment in full from Satchel World.
6. July 17:
Accounts Receivable (Lady GoGo) 1,400 birr
Sales Revenue 1,400 birr
Cost of Goods Sold 1,030 birr
Inventory 1,030 birr
Notes:
- The company sold suitcases on account to Lady GoGo for 1,400 birr.
- The sales revenue account is credited to record the increase in sales.
- The cost of goods sold is debited to record the cost of the items sold.
- The inventory account is credited to record the decrease in inventory.
7. July 18:
Accounts Payable (Holiday Manufacturers) 1,900 birr
Inventory 1,900 birr
Notes:
- The company purchased suitcases on account from Holiday Manufacturers with a cost of 1,900 birr.
- The inventory account is debited to record the increase in inventory.
8. July 18:
Freight Expense 125 birr
Cash 125 birr
Notes:
- The company made a cash payment of 125 birr for freight.
9. July 20:
Accounts Payable (Holiday Manufacturers) 300 birr
Inventory 300 birr
Notes:
- The company received a credit of 300 birr (including freight) for a returned suitcase to Holiday Manufacturers.
- The inventory account is debited to increase the inventory.
10. July 21:
Cash 1,400 birr
Accounts Receivable (Lady GoGo) 1,400 birr
Notes:
- The company received payment in full from Lady GoGo.
11. July 22:
Accounts Receivable (Vagabond) 2,400 birr
Sales Revenue 2,400 birr
Cost of Goods Sold 1,350 birr
Inventory 1,350 birr
Notes:
- The company sold suitcases on account to Vagabond for 2,400 birr.
- The sales revenue account is credited to record the increase in sales.
- The cost of goods sold is debited to record the cost of the items sold.
- The inventory account is credited to record the decrease in inventory.
12. July 31:
Accounts Receivable (Vagabond) 300 birr
Sales Returns and Allowances 300 birr
Cost of Goods Sold 120 birr
Inventory 120 birr
Notes:
- The company granted Vagabond a credit of 300 birr for a returned suitcase costing 120 birr.
- The sales returns and allowances account is credited to record the decrease in sales.
- The inventory account is debited to increase the inventory.
These are the journal entries for the transactions in the month of July for Ready-Set-Go, Ltd using the perpetual inventory system.