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    jamesfinance's Avatar
    jamesfinance Posts: 1, Reputation: 1
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    #1

    Oct 15, 2006, 09:38 PM
    Journal ?
    On July 5, ABC sold $2,800 merchandise and received cash. Its cost
    Was $2,000 from Ajax’s invoice.

    On July 10, ABC sold $13,400 merchandise on credit to its customer,
    Giovanni. Its cost was $8,600.

    How do you write these in journal form?
    laurnenw's Avatar
    laurnenw Posts: 6, Reputation: 1
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    #2

    Oct 16, 2006, 01:59 PM
    Next time, please post what you think are the answers, then we'll correct it if needed... thanks!

    I'm no expert, but here are my thoughts:

    I'm not completely sure about the July 5th journal entry because of the part when you say "its cost was $2000 from Ajax's invoice" that threw me off... how would it be from someone else's invoice?
    I suppose for the first part of the entry you would debit cash for $2,800 and credit inventory for the same amount.

    As far as July 10th :
    You would debit inventory for $13,400 and credit accounts payable for the same amount.
    Then you would do another journal entry for that date and debit cost of goods sold for $8,600, and credit inventory for that same amount.
    CaptainForest's Avatar
    CaptainForest Posts: 3,645, Reputation: 393
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    #3

    Oct 16, 2006, 10:01 PM
    laurnenw makes a good point. Next time show YOUR attempt at the work:

    July 5.
    You sold merchandise for $2,800 for cash which cost you $2,000.

    Dr. Cash 2,800
    Cr. Revenue 2,800

    Dr. COGS 2,000
    Cr. Inventory 2,000


    July 10.
    You sold merchandise for $13,400 on account, which cost you $8,600.

    Dr. Accounts Receivable - Giovanni 13,400
    Cr. Revenue 13,400

    Dr. COGS 8,600
    Cr. Inventory 8,600
    CaptainForest's Avatar
    CaptainForest Posts: 3,645, Reputation: 393
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    #4

    Oct 16, 2006, 10:02 PM
    Quote Originally Posted by laurnenw
    As far as July 10th :
    you would debit inventory for $13,400 and credit accounts payable for the same amount.
    then you would do another journal entry for that date and debit cost of goods sold for $8,600, and credit inventory for that same amount.
    You would NOT debit inventory. You are selling it, therefore you need to credit it.

    It should be assumed that this inventory has already been purchases and recorded. You must record the sale and the decrease of it from your stock.
    chiefofisi's Avatar
    chiefofisi Posts: 3, Reputation: 1
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    #5

    Oct 18, 2006, 10:20 AM
    Quote Originally Posted by jamesfinance
    On July 5, ABC sold $2,800 merchandise and received cash. Its cost
    was $2,000 from Ajax’s invoice.

    On July 10, ABC sold $13,400 merchandise on credit to its customer,
    Giovanni. Its cost was $8,600.

    How do you write these in journal form?
    5 July
    Cash - debit 2800
    Sales - credit 2800
    10 July
    Debtor (Giovanni) - debit 13400
    Sales - credit 13400
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