Question

Purchased merchandise on account from moonlight co., list price $85,000, trade discount 25%, terms fob destination, 2/10, n/30. 4 sold merchandise for cash, $37,680. the cost of the goods sold was $22,600. 5 purchased merchandise on account from papoose creek co., $47,500, terms fob shipping point, 2/10, n/30, with prepaid freight of $810 added to the invoice. 6 returned $13,500 ($18,000 list price less trade discount of 25%) of merchandise purchased on november 3 from moonlight co. 8 sold merchandise on account to quinn co., $15,600 with terms n/15. the cost of the goods sold was $9,400.

Answer 1

Hi, your question is incomplete however,  i have searched for the full question and it reads as follows :

The following were selected from among the transactions completed by Babcock Company during November of the current year:

Nov. 3 Purchased merchandise on account from Moonlight Co., list price $85,000, trade discount 25%, terms FOB destination, 2/10, n/30.

4 Sold merchandise for cash, $37,680. The cost of the merchandise sold was $22,600.

5 Purchased merchandise on account from Papoose Creek Co., $47,500, terms FOB shipping point, 2/10, n/30, with prepaid freight of $810 added to the invoice.

6 Returned $13,500 ($18,000 list price less trade discount of 25%) of merchandise purchased on November 3 from Moonlight Co.

8 Sold merchandise on account to Quinn Co., $15,600 with terms n/15. The cost of the merchandise sold was $9,400.

13 Paid Moonlight Co. on account for purchase of November 3, less return of November 6.

14 Sold merchandise on VISA, $236,000. The cost of the merchandise sold was $140,000.

15 Paid Papoose Creek Co. on account for purchase of November 5.

23 Received cash on account from sale of November 8 to Quinn Co..

24 Sold merchandise on account to Rabel Co. 6,900, terms 1/10, n/30. The cost of the merchandise sold was $34,000.

28 Paid VISA service fee of $3,540.

30 Paid Quinn Co. a cash refund of $6,000 for returned merchandise from sale of November 8. The cost of the returned merchandise was $3,300.

Journalize the entries to record the transactions of Babcock Company for November using the periodic inventory system.

Answer:

Nov 3

Merchandise $21,250 (debit)

Trade Payable : Moonlight Co. $21,250 (credit)

Nov 4

Cash $37,680 (debit)

Cost of Goods Sold $22,600 (debit)

Sales Revenue $37,680 (credit)

Merchandise $22,600 (credit)

Nov 5

Merchandise $47,500 (debit)

Trade Payable : Papoose Creek Co $47,500 (credit)

Nov 6

Trade Payable : Moonlight Co. $13,500 (debit)

Merchandise $13,500 (credit)

Nov 8

Accounts Receivable : Quinn Co. $15,600 (debit)

Cost of Goods Sold $9,400 (debit)

Sales Revenue $15,600 (credit)

Merchandise $9,400 (credit)

Nov 13

Trade Payable : Moonlight Co. $7,750 (debit)

Discount allowed $155 (credit)

Cash $7,620 (credit)

Nov 14

Cash $236,000 (debit)

Cost of Goods Sold $140,000 (debit)

Sales Revenue $236,000 (credit)

Merchandise $140,000 (credit)

Nov 15

Trade Payable : Papoose Creek Co $47,500 (debit

Discount Allowed $950 (credit)

Cash $46,550 (credit)

Nov 23

Cash $15,600 (debit)

Accounts Receivable : Quinn Co. $15,600 (credit)

Nov 24

Accounts Receivable : Rabel Co.. $56,900 (debit)

Cost of Goods Sold $34,000 (debit)

Sales Revenue $56,900 (credit)

Merchandise $34,000 (credit)

Nov 28

Visa Service Fee $3,540 (debit)

Cash $3,540 (credit)

Nov 3

Sales Revenue $6,000 (debit)

Merchandise  $3,300 (debit)

Accounts Receivable : Quinn Co.  $3,300 (credit)

Cost of Goods Sold $9,400 (credit)

Explanation:

Please Be very careful :

-to exclude trade discount

-to to use perpetual inventory method

- to check if payment falls within the cash discount period

- include freight charges in invoice amount for FOB purchases

See the journal prepared above.