Question

Prepare the journal entries to record the following transactions on Kwang Company's books using a perpetual inventory system.

a. On March 2, Kwang Company sold $900,000 of merchandise to Sensat Company, terms 2/10, n/30. The cost of the merchandise sold was $620,000.
b. On March 6, Sensat Company returned $90,000 of the merchandise purchased on March 2. The cost of the returned merchandise was $62,000.
c. On March 12, Kwang Company received the balance due from Sensat Company. From the information in BE5-4, prepare the journal entries to record these transactions on Sensat Company's books under a perpetual inventory system.

Answer 1

Answer:

Solution BE5-4

                              Journal Entries

      Date      Particulars                            Debit         Credit

(a)  02-Mar   Accounts Receivable      $900,000

                             Sales Revenue                           $900,000

     02-Mar    Cost of goods sold         $620,000

                              Inventory                                    $620,000

(b)  06-Mar    Sales Return & allowances  $90,000

                             Accounts receivable                  $90,000

     06-Mar      Inventory                         $62,000

                             Cost of goods sold                      $62,000

(c)   12-Mar      Cash                                 $793,800

                       Sales Discount                 $16,200

                       ($810,000*2%)  

                              Accounts receivable                   $810,000

                              ($900000- $90000)

Solution BE5-5:

                              Journal Entries

       Date     Particulars            Debit            Credit

(a)  02-Mar   Inventory          $900,000

                          Accounts payable              $900,000

(b)  06-Mar Accounts payable  $90,000

                           Inventory                         $90,000

(c)   12-Mar  Accounts Payable $810,000

                   ($900000- $90000)

                             Inventory ($810000*2%)   $16,200

                             Cash                                   $793,800