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13 July, 06:22

Gamegirl Inc., has the following transactions during August. August 6 Sold 58 handheld game devices for $140 each to DS Unlimited on account, terms 2/10, net 60. The cost of the 58 game devices sold, was $120 each. August 10 DS Unlimited returned three game devices purchased on 6th August since they were defective. August 14 Received full amount due from DS Unlimited. Required: Prepare the transactions for GameGirl, Inc., assuming the company uses a perpetual inventory system. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

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  1. 13 July, 07:55
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    On August 6,

    1. Debit Cost of goods sold $6,960

    Credit Handheld game devices $6,960

    2. Debit Receivable Accounts $8,120

    Credit Sales $8,120

    On August 10,

    1. Debit Handheld game devices $360

    Credit Cost of goods sold $360

    2. Debit Sales $420

    Credit Receivable Accounts $420

    On August 14,

    Debit Cash $7,546

    Debit Sales Discount $154

    Credit Receivable Accounts $7,700

    Explanation:

    On August 6, when Gamegirl Inc., sold handheld game devices, the following entries were made:

    1. Debit Cost of goods sold $6,960

    Credit Handheld game devices $6,960

    2. Debit Receivable Accounts $8,120

    Credit Sales $8,120

    On August 10,

    1. Debit Handheld game devices $360

    Credit Cost of goods sold $360

    2. Debit Sales $420

    Credit Receivable Accounts $420

    Credit terms of 2/10, n/60 means that 2% discount for the payment within 10 days and the full amount to be paid within 60 days.

    On August 14, DS Unlimited pays and takes the appropriate discount:

    2% x ($8,120 - $420) = $154

    Cash GameGirl, Inc., receives: $8,120 - $420 - $154 = $7,546

    The journal entry that GameGirl, Inc., makes:

    Debit Cash $7,546

    Debit Sales Discount $154

    Credit Receivable Accounts $7,700
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