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What do these journal entries look like?
Prepare journal entries to record the following merchandising transactions of Mason Company, which applies the perpetual inventory system. (Hint: It will help to identify each receivable and payable; for example, record the purchase on July 3 in Accounts Payable-OLB.)
July 3 Purchased merchandise from OLB Corp. for $15,000 under credit terms of 1/10, n/30, FOB destination, invoice dated July 3. July 4 At OLB's request, Mason paid $150 cash for freight charges on the July 3 purchase, reducing the amount owed to OLB. July 7 Sold merchandise to Brill Co. for $11,500 under credit terms of 2/10, n/60, FOB destination, invoice dated July 7. The merchandise had cost $7,750. July 10 Purchased merchandise from Rupert Corporation for $14,200 under credit terms of 1/10, n/45, FOB shipping point, invoice dated July 10. The invoice showed that at Mason’s request, Rupert paid the $500 shipping charges and added that amount to the bill. (Hint: Discounts are not applied to freight and shipping charges.) July 11 Paid $300 cash for shipping charges related to the July 7 sale to Brill Co. July 12 Brill returned merchandise from the July 7 sale that had cost Mason $1,450 and been sold for $1,850. The merchandise was restored to inventory. July 14 After negotiations with Rupert Corporation concerning problems with the merchandise purchased on July 10, Mason received a credit memorandum from Rupert granting a price reduction of $2,000. July 17 Received balance due from Brill Co. for the July 7 sale less the return on July 12. July 20 Paid the amount due Rupert Corporation for the July 10 purchase less the price reduction granted. July 21 Sold merchandise to Brown for $11,000 under credit terms of 1/10, n/30, FOB shipping point, invoice dated July 21. The merchandise had cost $7,000. July 24 Brown requested a price reduction on the July 21 sale because the merchandise did not meet specifications. Mason sent Brown a credit memorandum for $1,300 to resolve the issue. July 30 Received Brown’s cash payment for the amount due from the July 21 sale. July 31 Paid OLB Corp. the amount due from the July 3 purchase. |
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