Microprints Inc. had the following transactions for the month of August 20X1 Aug
ID: 2395604 • Letter: M
Question
Microprints Inc. had the following transactions for the month of August 20X1
Aug. 2 Sold merchandise on account for $25,000; terms 2/10, n/30, FOB shipping point. The cost of goods sold is $18,000.
Aug. 18 Received payment for the sale of August 2.
Aug. 20 A total of $1,000 of the merchandise sold on August 2 was returned, and a full refund was made because it was the wrong merchandise. The cost of goods sold is $720.
Aug. 28 An allowance of $1,300 was granted on the sale from August 2 because some merchandise was damaged; $1,300 cash was returned to the customer.
Requirement:
1) Using the template, prepare journal entries for Microprints:
i) Periodic system.
ii) Perpetual system.
Microprints Inc.
Journal Entries
Date
Account Name
Periodic System
Perpetual System
August
Debit
Credit
Debit
Credit
2
a)
b)
18
20
a)
b)
28
Microprints Inc.
Journal Entries
Date
Account Name
Periodic System
Perpetual System
August
Debit
Credit
Debit
Credit
2
a)
b)
18
20
a)
b)
28
Explanation / Answer
Solution:
Microprints Inc. Journal Entries Date Acounts Name Periodic System Perpetual System August Debit Credit 2 a) Accounts Recevables Dr $25,000.00 $25,000.00 To Sales Revenue $25,000.00 $25,000.00 (To record sales on account) b) Cost Of Goods Sold Dr $18,000.00 To Inventories $18,000.00 (To record cost of goods sold) 18 Cash Dr $25,000.00 $25,000.00 To Accounts Receivabe $25,000.00 $25,000.00 (To record payment received) 20 a) Sales Returns and allowances Dr $1,000.00 $1,000.00 To Cash $1,000.00 $1,000.00 (To record sales return) b) Inventories Dr $720.00 To Cost of Goods sold $720.00 (to reverse the cost of inventories returned) 28 Sales Allowances Dr $1,300.00 $1,300.00 To Cash $1,300.00 $1,300.00 (To record sales allowance)