Hutton Company uses a sales journal, a purchases journal, a cash receipts journal, a cash disbursement journal, and a general journal. The following transactions occur in the month of March:
1) Mar 2 Sold merchandise costing $300 to B er for $450 cash, invoice no 5703.
2) 5 Purchased $2,300 of merchandise on credit from Marsh Corp.
3) 7 Sold merchandise costing $800 to J. Dryer for $1,150, terms 2_10, n_30, invoice no 5704
4) 8 Borrowed $8,000 cash by signing a note payable to the bank.
5) 12 Sold merchandise costing $200 to R. Land for $320, terms n_30, invoice no 5705
6) 16 Received $1,127 cash from J Dryer to pay for the purchase of March 7
7) 19 Sold used store equipment for $900 cash to Malone, Inc
8) 25 Sold merchandise costing $350 to T. Burton for $550, terms n_30, invoice no 5706
Prepare headings for a sales journal like the one in Exhibit 7-5 Journalize the March transactions that should be recorded in this sales journal.
I can't show what 7-5 exhibit shows, but that is what I am trying to use to help me with this but I still do not understand what exactly to do. It does not really have any steps listed, the way the sales journal is it doesn't make sense, here is what the set up for it is:
Date
Acct Debited
Invoice Num
Accts Rec Dr Sales Cr
Cost of Goods Sold Dr Inven Cr
These are the columns it gives and that is what is making it confussing. Can someone please guide me
The sald
To record the March transactions in the sales journal, follow these steps:
1) Prepare the headings for the sales journal as follows:
- Date
- Customer/Account Debited
- Invoice Number
- Accounts Receivable Debit
- Sales Credit
- Cost of Goods Sold Debit
- Inventory Credit
2) Now, let's journalize the transactions:
March 2:
- Date: Mar 2
- Customer/Account Debited: B er
- Invoice Number: 5703
- Accounts Receivable Debit: $450 (since the customer paid in cash)
- Sales Credit: $450 (the selling price)
- Cost of Goods Sold Debit: $300 (the cost of the merchandise sold)
- Inventory Credit: $300 (to reduce inventory)
March 7:
- Date: Mar 7
- Customer/Account Debited: J. Dryer
- Invoice Number: 5704
- Accounts Receivable Debit: $1,150 (since payment is not received immediately due to the credit sale)
- Sales Credit: $1,150 (the selling price)
- Cost of Goods Sold Debit: $800 (the cost of the merchandise sold)
- Inventory Credit: $800 (to reduce inventory)
March 12:
- Date: Mar 12
- Customer/Account Debited: R. Land
- Invoice Number: 5705
- Accounts Receivable Debit: $320 (since payment is not received immediately due to the credit sale)
- Sales Credit: $320 (the selling price)
- Cost of Goods Sold Debit: $200 (the cost of the merchandise sold)
- Inventory Credit: $200 (to reduce inventory)
March 19:
- Date: Mar 19
- Customer/Account Debited: Malone, Inc
- Invoice Number: (You need to assign a unique invoice number)
- Accounts Receivable Debit: $900 (since payment is received immediately)
- Sales Credit: $900 (the selling price)
- Cost of Goods Sold Debit: (Since the equipment sold is not mentioned to have a cost, this column is left blank)
- Inventory Credit: (Since the equipment sold is not mentioned to have a cost, this column is left blank)
March 25:
- Date: Mar 25
- Customer/Account Debited: T. Burton
- Invoice Number: 5706
- Accounts Receivable Debit: $550 (since payment is not received immediately due to the credit sale)
- Sales Credit: $550 (the selling price)
- Cost of Goods Sold Debit: $350 (the cost of the merchandise sold)
- Inventory Credit: $350 (to reduce inventory)
That's it! You have now recorded the March transactions in the sales journal. Remember to update the appropriate accounts such as Accounts Receivable, Sales, Cost of Goods Sold, and Inventory based on the amounts recorded in the respective columns.
To prepare the sales journal, you need to follow the given headings and record the March transactions accordingly. I will explain each column to help you understand how to fill them:
1) Date: Write the date of each transaction in this column.
2) Acct Debited: Identify the customer's account that should be debited (increased) for each transaction. In this case, it would be the accounts receivable account of the customer.
3) Invoice Num: Assign a unique invoice number to each transaction. This helps in organizing and referencing the sales transactions.
4) Accts Rec Dr: In this column, you will record the amount of the sale as a debit to the accounts receivable account. This represents the increase in accounts receivable due to the sale.
5) Sales Cr: Record the amount of the sale as a credit to the sales account. This represents the increase in sales revenue.
6) Cost of Goods Sold Dr: Record the cost of goods sold for each transaction as a debit in this column. This represents the decrease in inventory and is necessary to calculate gross profit.
7) Inven Cr: Record the cost of goods sold as a credit to the inventory account. This reflects the reduction in the inventory balance.
Now, let's apply this understanding to the transactions provided:
1) Mar 2 Sold merchandise costing $300 to B er for $450 cash, invoice no 5703.
- Date: March 2
- Acct Debited: B er (Accounts Receivable)
- Invoice Num: 5703
- Accts Rec Dr: $450
- Sales Cr: $450
- Cost of Goods Sold Dr: $300
- Inven Cr: $300
You need to follow this format and complete the sales journal for all the given transactions in a similar manner.