Aug.
1. Summit Company sold merchandise on account to Beartooth Co., $48,000, terms FOB destination, 2/15, n/eom. The cost of the merchandise sold was $28,800.
2. Summit Company paid freight of $1,150 for delivery of merchandise sold to Beartooth Co. on August 1.
5. Summit Company sold merchandise on account to Beartooth Co., $66,000, terms FOB shipping point, n/45. The cost of the merchandise sold was $40,000.
9. Beartooth Co. paid freight of $2,300 on August 5 purchase from Summit Company.
15. Summit Company sold merchandise on account to Beartooth Co., $58,700, terms FOB shipping point, 1/10, n/30. Summit Company paid freight of $1,675, which was added to the invoice. The cost of the merchandise sold was $35,000.
16. Beartooth Co. paid Summit Company for purchase of August 1.
20. Summit Company paid Beartooth Co. a refund of $1,800 for defective merchandise in the August 1 purchase. Beartooth Co. agreed to keep the merchandise.
25. Beartooth Co. paid Summit Company on account for purchase of August 15.
31. Summit Company granted a customer allowance (credit memo) to Beartooth Co. for $6,000 (invoiced amount) for merchandise that was returned from the August 1 purchase. The cost of the merchandise returned was $3,200.
Instructions
Journalize the August transactions for (1) Summit Company and (2) Beartooth Co.
Answer:
1.
Aug. 1 Accounts Receivable—Beartooth Co. 47,040
Sales47,040
[$48,000 – ($48,000 × 2%)]
1 Cost of Merchandise Sold 28,800
Merchandise Inventory28,800
2 Delivery Expense1,150
Cash1,150
5 Accounts Receivable—Beartooth Co. 66,000
Sales66,000
5 Cost of Merchandise Sold 40,000
Merchandise Inventory40,000
15 Accounts Receivable—Beartooth Co. 58,113
Sales58,113
[$58,700 – ($58,700 × 1%)]
15 Accounts Receivable—Beartooth Co. 1,675
Cash1,675
15 Cost of Merchandise Sold 35,000
Merchandise Inventory35,000
16 Cash47,040
Accounts Receivable—Beartooth Co. 47,040
20 Customer Refunds Payable 1,800
Cash1,800
25 Cash ($58,113 + $1,675)59,788
Accounts Receivable—Beartooth Co. 59,788
31 Customer Refunds Payable
[$6,000 – ($6,000 × 2%)]5,880
Accounts Receivable—Beartooth Co. 5,880
31 Merchandise Inventory3,200
Estimated Returns Inventory3,200
2.
Aug. 1 Merchandise Inventory47,040
Accounts Payable—Summit Company 47,040
5 Merchandise Inventory66,000
Accounts Payable—Summit Company 66,000
9 Merchandise Inventory2,300
Cash2,300
15 Merchandise Inventory59,788
Accounts Payable—Summit Company 59,788
{[$58,700 – ($58,700 × 1%)] + $1,675}
16 Accounts Payable—Summit Company 47,040
Cash47,040
20 Cash1,800
Merchandise Inventory1,800
25 Accounts Payable—Summit Company 59,788
Cash59,788
31 Accounts Payable—Summit Company 5,880
Merchandise Inventory 5,880
[$6,000 – ($6,000 × 2%)]