stephanie_hastings4 Posts: 3, Reputation: 1 New Member #1 Nov 25, 2007, 11:33 PM
Preparing journal entries
I have a homework problem that I cannot seem to figure out because my teacher doesn't really teach us.

Jones company is a furniture retailer and uses the perpetual inventory system. On January 14 2007 jones purchased merchandise inventory at a cost of 25000. Credit terms were 2/10, n/30. The inventory was sold on account for 40000 on jan 21 2007. Credit terms were 1/10, n/30. The accounts payable was settled on jan 23, 2007, and the accounts receivables were settled on jan 30, 2007. Prepapre journal entries to record each of these transactions

PLEASE EXPLAIN HOW IM SUPPOSED TO PREPARE JOURNAL ENTRIES FOR THESE AND ALSO WHY IM SUPPOSED TO DO IT THAT WAY. Thank you:)
 student 101 Posts: 53, Reputation: 1 Junior Member #2 Nov 25, 2007, 11:59 PM
Originally Posted by stephanie_hastings4
i have a homework problem that i cannot seem to figure out because my teacher doesnt really teach us.

jones company is a furniture retailer and uses the perpetual inventory system. on january 14 2007 jones purchased merchandise inventory at a cost of 25000. credit terms were 2/10, n/30. the inventory was sold on account for 40000 on jan 21 2007. credit terms were 1/10, n/30. the accounts payable was settled on jan 23, 2007, and the accounts receivables were settled on jan 30, 2007. prepapre journal entries to record each of these transactions

PLEASE EXPLAIN HOW IM SUPPOSED TO PREPARE JOURNAL ENTRIES FOR THESE AND ALSO WHY IM SUPPOSED TO DO IT THAT WAY. thank you:)
Merchandise inventory... debit \$25,000
Accounts payable... credit\$25,000
To record inventory purchase in credit terms 2/10 and n/30
Cash... d \$40,000
Sales... c 40,000
To rdecord sale in terms 1,10 and n/30
Cost of goods sold... 40,000
Merchandise inventory... 40,000
To record cost of goods sold
Then after this entris to settle acounts payable you debit accounts payable and interest expense and credit cash by the same amount of the previous two and do vise versa against accounts recevables, by debiting cash and crediting interests and accounts recevables... note you9 have to calculate interest expence and interest by 1/10 and n/30 and if paid before then I think you have to give a discount for payment on time and you get a discount for paying on time
 qcmar24 Posts: 65, Reputation: 3 Junior Member #3 Nov 26, 2007, 12:29 AM
Originally Posted by stephanie_hastings4
i have a homework problem that i cannot seem to figure out because my teacher doesnt really teach us.

jones company is a furniture retailer and uses the perpetual inventory system. on january 14 2007 jones purchased merchandise inventory at a cost of 25000. credit terms were 2/10, n/30. the inventory was sold on account for 40000 on jan 21 2007. credit terms were 1/10, n/30. the accounts payable was settled on jan 23, 2007, and the accounts receivables were settled on jan 30, 2007. prepapre journal entries to record each of these transactions

PLEASE EXPLAIN HOW IM SUPPOSED TO PREPARE JOURNAL ENTRIES FOR THESE AND ALSO WHY IM SUPPOSED TO DO IT THAT WAY. thank you:)
Firstable you need to register the entry for the purchase of merchandise
Dr. Merchandise Inventory... 25,000
Cr. Accounts Payable... 25,000
Purchased merchandise credit terms 2/10,n/30
------------------------------------------------------
Dr.Accounts receivable... 40,000
Cr. Sales... 40,000
Sold inventory credit terms 1/10,n/30
--------------------------------------------------------
Dr. Cost of goods sold... 25,000
Cr. Merchandise Inventory... 25,000
To report the cost of the sold inventory
--------------------------------------------------------
Dr. Accounts Payable... 25,000
Cr. Merchandise Inventory... 500
Cr. Cash... 24,500
The balance on account payable was paid less discount 2/10
-----------------------------------------------------------------------
Dr. Merchandise Inventory... 500
Cr. Cost of goods sold... 500
To adjust the actual cost of the inventory sold on jan 21
------------------------------------------------------------------
Dr. Cash... 39,600
Dr. Sales Discounts... 400
Cr. Accounts Receivable... 40,000
Received payment for accounts receivable less discount 1/10
 qcmar24 Posts: 65, Reputation: 3 Junior Member #4 Nov 26, 2007, 12:43 AM
Originally Posted by student 101
merchandise inventory........debit \$25,000
Accounts payable.............................credit\$25,000
to record inventory purchase in credit terms 2/10 and n/30
cash....................................d \$40,000
sales............................................. c 40,000
to rdecord sale in terms 1,10 and n/30
cost of goods sold..........................40,000
merchandise inventory........................40,000
to record cost of goods sold
then after this entris to settle acounts payable you debit accounts payable and interest expense and credit cash by the same amount of the previous two and do vise versa against accounts recevables, by debiting cash and crediting interests and accounts recevables....note you9 have to calculate interest expence and interest by 1/10 and n/30 and if paid before then i think you have to give a discount for payment on time and you get a discount for paying on time
Don't even bother reading my little brother's answer, is not completely wrong but is not right. He was working on his homework and did not concentrate before answering your question.:D

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