John's specialty store uses a perpetual inveentory system. the following are some inventory transaction for the month of may 2009.
John's purchased merchandise on account for $5,000. FREIGHT CHARGE OF $300 WERE PAID IN CASH.
JOHN'S RETURNED SOME OF THE MERCHANDISE PURCHASED IN (1) tHE COST OF THE MERCHANDISE WAS $600 AND JOHN'S ACCOUNT WAS CREDITED BY THE SUPPLIER.
MERCHANDISE COSTING $2,800 WAS SOLD FOR $5,200 IN CSH.
PLEASE HELP ME PREPARE THE NECESSARY JOURNAL ENTRIES TO RECORD THESE TRANSACTIONS.
To prepare the necessary journal entries to record these transactions, we need to analyze each transaction and identify the accounts affected before recording them.
1. Purchase of merchandise on account for $5,000 with a freight charge of $300 paid in cash:
- The accounts affected are:
- Merchandise Inventory (increase by $5,000)
- Accounts Payable (increase by $5,000)
- Cash (decrease by $300)
- Freight Expense (increase by $300)
The journal entry would be as follows:
Merchandise Inventory $5,000
Freight Expense $300
Accounts Payable $5,000
Cash $300
2. Return of merchandise costing $600:
- The accounts affected are:
- Accounts Payable (decrease by $600)
- Merchandise Inventory (decrease by $600)
The journal entry would be as follows:
Accounts Payable $600
Merchandise Inventory $600
3. Sale of merchandise costing $2,800 for $5,200 in cash:
- The accounts affected are:
- Cash (increase by $5,200)
- Sales Revenue (increase by $5,200)
- Cost of Goods Sold (increase by $2,800)
- Merchandise Inventory (decrease by $2,800)
The journal entry would be as follows:
Cash $5,200
Sales Revenue $5,200
Cost of Goods Sold: $2,800
Merchandise Inventory $2,800
These are the necessary journal entries based on the given information for the month of May 2009.