Question & Answer: Journal Entries for Merchandise Transactions Perpetual System Webster Company was estab- lished on July 1. Its sales terms are 2/10, n/30. Credit terms f…..

Journal Entries for Merchandise Transactions Perpetual System Webster Company was estab- lished on July 1. Its sales terms are 2/10, n/30. Credit terms for its purchases vary with the supplier. Se- tions for the first month of operations are given below. Unless noted, all transactions are on 2B lected transact nt and involve merchandise held for resale. Webster Company uses the perpetual inventory system. accou 1 Purchased goods from Dawson, Inc., $2,500; terms 1/10, n/30. 2 Purchased goods from Penn Company, $4,500; terms 2/10, n/30. 3 Paid freight on shipment from Dawson, $300. 5 Sold merchandise to Ward, Inc. $1,400 ($1,100 cost). 5 Paid freight on shipment to Ward, Inc, .$90. (Hint: debit Delivery Expense) 8 Returned $500 worth of the goods purchased July 1 from Dawson, Inc., because some July goods were damaged. Dawson approved the return. 9 Received returned goods from Ward, Inc., worth $200 ($150 cost). 10 Paid Dawson, Inc., the amount due. 10 Purchased goods from Dorn Company with a list price of $2.600. Terms 2/10, n/30. 11 Paid freight on shipment from Dorn Company, $150. 15 Received the amount due from Ward, Inc. 15 Sold merchandise to Colby Corporation, $3,200 ($2.,400 cost). 16 Mailed a check to Penn Company for the amount due on its July 2 invoice. 18 Received an allowance of $200 from Dorn Company for defective merchandise purchased on July 10. 19 Paid Dorn Company the amount due. 25 Received the amount due from Colby Corporation. Required Prepare the necessary journal entries for the Webster Company
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Journal Entries for Merchandise Transactions Perpetual System Webster Company was estab- lished on July 1. Its sales terms are 2/10, n/30. Credit terms for its purchases vary with the supplier. Se- tions for the first month of operations are given below. Unless noted, all transactions are on 2B lected transact nt and involve merchandise held for resale. Webster Company uses the perpetual inventory system. accou 1 Purchased goods from Dawson, Inc., $2,500; terms 1/10, n/30. 2 Purchased goods from Penn Company, $4,500; terms 2/10, n/30. 3 Paid freight on shipment from Dawson, $300. 5 Sold merchandise to Ward, Inc. $1,400 ($1,100 cost). 5 Paid freight on shipment to Ward, Inc, .$90. (Hint: debit Delivery Expense) 8 Returned $500 worth of the goods purchased July 1 from Dawson, Inc., because some July goods were damaged. Dawson approved the return. 9 Received returned goods from Ward, Inc., worth $200 ($150 cost). 10 Paid Dawson, Inc., the amount due. 10 Purchased goods from Dorn Company with a list price of $2.600. Terms 2/10, n/30. 11 Paid freight on shipment from Dorn Company, $150. 15 Received the amount due from Ward, Inc. 15 Sold merchandise to Colby Corporation, $3,200 ($2.,400 cost). 16 Mailed a check to Penn Company for the amount due on its July 2 invoice. 18 Received an allowance of $200 from Dorn Company for defective merchandise purchased on July 10. 19 Paid Dorn Company the amount due. 25 Received the amount due from Colby Corporation. Required Prepare the necessary journal entries for the Webster Company

Expert Answer

 

Date Account Title and Explanation Debit Credit
July
1 Inventory $2,500
Accounts Payable $2,500
(Being inventory purchased)
2 Inventory $4,500
Accounts Payable $4,500
(Being inventory purchased)
3 Inventory $300
Cash $300
(Being freight paid in cash)
5 Accounts Receivable $1,400
Sale $1,400
(Being sales effected)
Cost of Goods Sold $1,100
Inventory $1,100
(Being sales affected)
5 Delivery Expense $90
Cash $90
(Being freight outward paid)
8 Accounts Payable $500
Inventory $500
(Being purchase return done)
9 Sale Return and Allowances $200
Accounts Receivable $200
(Being Sales return done)
Inventory $150
Cost of Goods Sold $150
(Being sale return done)
10 Accounts Payable $2,000
Inventory $20
Cash $1,980
(Being payment done to supplier)
10 Inventory $2,600
Accounts Payable $2,600
(Being inventory purchased)
11 Inventory $150
Cash $150
(Being freight paid)
15 Cash $1,200
Accounts Receivable $1,200
(Being cash received)
15 Accounts Receivable $3,200
Sale $3,200
(Being sales effected)
Cost of Goods Sold $2,400
Inventory $2,400
(Being sales affected)
16 Accounts Payable $4,500
Bank $4,500
(Being payment to supplier done)
18 Accounts Payable $200
Allowance for defective merchandise $200
(Being allowance received)
19 Accounts Payable $2,200
Inventory $48
Cash $2,152
(Being payment done to supplier)
25 Cash $3,200
Accounts Receivable $3,200
(Being payment received)

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