Question

Shore Co. sold merchandise to Blue Star Co. on account, $112,000, terms FOB shipping point, 2/10, n/30. The cost of the goods sold is $67,200. Shore paid freight of $1,800. Journalize Shore Co.'s entry for the sale, purchase, and payment of amount due, using the net method under a perpetual inventory system. If an amount box does not require an entry, leave it blank.

Answer 1

Answer:

See explanation section

Explanation:

Sales journal

A. Accounts receivable - Blue Star Co.     Debit   $109,760

Sales revenue                                        credit   $109,760

Note: Calculation: (112,000-(112,000 × 2%) = (112,000 - 2,240) = $109,760.

As the company used net method under a perpetual inventory system, during the sales, the company deducted the discount.

B. Cost of good sold        Debit  $67,200

Merchandise inventory   Credit  $67,200

Note: Under the perpetual inventory system, a seller has to record cost of good sold journal.

Purchase journal

Merchandise inventory                 Debit   $109,760

Accounts payable - Shore Co.     Credit  $109,760

Note: Calculation: (112,000-(112,000 × 2%) = (112,000 - 2,240) = $109,760.

As the company used net method under a perpetual inventory system, during the purchase, the company got the discount.

Freight expense

Delivery expense    debit    $1,800  

Cash                         credit   $1,800

Note: To record shipping cost for sale.