Campus Stop, Inc., is a student co-op. Campus Stop uses a perpetual inventory system. The following transactions (summarized) have been selected for analysis: a. Sold merchandise for cash (cost of merchandise $141,870). $ 253,000 b. Received merchandise returned by customers as unsatisfactory (but in perfect condition) for cash refund (original cost of merchandise $650). 1,600 c. Sold merchandise (costing $4,500) to a customer on account with terms n/30. 10,000 d. Collected half of the balance owed by the customer in (c). 5,000 e. Granted a partial allowance relating to credit sales the customer in (c) had not yet paid. 1,600 Prepare journal entries to record transactions (a) - (e). (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

Question

Business

Cecelia Donaldson

6 February, 13:00

Campus Stop, Inc., is a student co-op. Campus Stop uses a perpetual inventory system. The following transactions (summarized) have been selected for analysis: a. Sold merchandise for cash (cost of merchandise $141,870). $ 253,000 b. Received merchandise returned by customers as unsatisfactory (but in perfect condition) for cash refund (original cost of merchandise $650). 1,600 c. Sold merchandise (costing $4,500) to a customer on account with terms n/30. 10,000 d. Collected half of the balance owed by the customer in (c). 5,000 e. Granted a partial allowance relating to credit sales the customer in (c) had not yet paid. 1,600 Prepare journal entries to record transactions (a) - (e). (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

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Eleanor · Answer 1

See explanation section

Explanation:

Requirement A

Cash Debit $253,000

Sales revenue credit $253,000

Note: To record the sales on cash with no terms and conditions

Cost of goods sold debit $141,870

Merchandise inventory credit $141,870

Note: As the company uses a perpetual inventory system, the company records the cost of merchandise inventory journals.

Requirement B

Customer refunds payable debit $1,600

Cash credit $1,600

Note: Campus Stop, Inc. refunded cash to the customer because of unsatisfactory merchandise.

Merchandise inventory debit $650

Estimated returns inventory credit $650

Note: As the company uses a perpetual inventory system, the company records the cost of merchandise inventory returned journals.

Requirement C.

Accounts receivable debit $10,000

Sales revenue credit $10,000

Note: To record the sales on account with no discounting terms but has to receive the payment within 30 days.

Cost of goods sold debit $4,500

Merchandise inventory credit $4,500

Note: As the company uses a perpetual inventory system, the company records the cost of merchandise inventory journals.

Requirement D and E.

D. Cash Debit $5,000

Accounts receivable Credit $5,000

Note: Collected half of the balance owed by the customer in transaction c.

E. Cash debit $3,400

Merchandise inventory debit $1,600

Accounts receivable credit $5,000

Note: Receive the remaining payment from the customer by granting a discount assuming the buyer paid the remaining part earlier than expected.