At the beginning of July, CD City has a balance in inventory of $2,950. The following transactions occur during the month of July. July 3 Purchase CDs on account from Wholesale Music for $1,850, terms 2/10, n/30. July 4 Pay cash for freight charges related to the July 3 purchase from Wholesale Music, $110. July 9 Return incorrectly ordered CDs to Wholesale Music and receive credit, $200. July 11 Pay Wholesale Music in full. July 12 Sell CDs to customers on account, $4,900, that had a cost of $2,550. July 15 Receive full payment from customers related to the sale on July 12. July 18 Purchase CDs on account from Music Supply for $2,650, terms 2/10, n/30. July 22 Sell CDs to customers for cash, $3,750, that had a cost of $2,050. July 28 Return CDs to Music Supply and receive credit of $210. July 30 Pay Music Supply in full. Assuming that CD City uses a perpetual inventory system, record the transactions.

Question

Business

Kailey Swanson

Today, 02:47

At the beginning of July, CD City has a balance in inventory of $2,950. The following transactions occur during the month of July. July 3 Purchase CDs on account from Wholesale Music for $1,850, terms 2/10, n/30. July 4 Pay cash for freight charges related to the July 3 purchase from Wholesale Music, $110. July 9 Return incorrectly ordered CDs to Wholesale Music and receive credit, $200. July 11 Pay Wholesale Music in full. July 12 Sell CDs to customers on account, $4,900, that had a cost of $2,550. July 15 Receive full payment from customers related to the sale on July 12. July 18 Purchase CDs on account from Music Supply for $2,650, terms 2/10, n/30. July 22 Sell CDs to customers for cash, $3,750, that had a cost of $2,050. July 28 Return CDs to Music Supply and receive credit of $210. July 30 Pay Music Supply in full. Assuming that CD City uses a perpetual inventory system, record the transactions.

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Answers (1)

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Dylan Singh · Answer 1

Answer and Explanation:

The Journal entries is shown below:-

1. Merchandise Inventory Dr, $1,850

To Accounts payable $1,850

(Being inventory is recorded)

2. Merchandise Inventory Dr, $110

To Cash $110

(Being cash paid is recorded)

3. Accounts payable Dr, $200

To Merchandise Inventory $200

(Being return inventory is recorded)

4. Accounts Payable Dr, $1,650 ($1,850 - $200)

Inventory Dr, $33 ($1,650 * 2%)

To Cash $1,617

(Being cash paid is recorded)

5. Accounts receivable Dr, $4,900

To Sales revenue $4,900

(Being sales revenue is recorded)

6. Cost of goods sold Dr, $2,550

To Merchandise Inventory $2,550

(Being cost of goods sold is recorded)

7. Cash Dr, $4,900

To Accounts receivable $4,900

(Being cash receipt is recorded)

8. Inventory Dr, $2,650

To Accounts payable $2,650

(Being inventory is recorded)

9. Cash Dr, $3,750

To Sales revenue $3,750

(Being cash receipt is recorded)

10. Cost of goods sold Dr, $2,050

To Merchandise Inventory $2,050

(Being cost of goods sold is recorded)

11. Accounts payable Dr, $210

To Merchandise Inventory $210

(Being inventory is recorded)

12. Accounts payable Dr, $2,440 ($2,650 - $210)

To Cash $2,440

(Being cash is recorded)