Problem 7: Merchandising Transactions (12 points) Menke Company is a furniture r

Question

Problem 7: Merchandising Transactions (12 points) Menke Company is a furniture retailer and uses the perpetual inventory system. On January 14, 2012, Menke purchased merchandise inventory at a cost of $30,000. Credit terms were 2/10, n/30. The inventory was sold on account for $40,000 on January 21, 2012. Credit terms were 1/10, n/30. The accounts payable was paid on January 23, 2012, and the accounts receivables was collected on January 30, 2012. Prepare journal entries to record each of these transactions. 10

Explanation / Answer

Journal entry :

Date accounts & explanation debit credit Jan 14 Merchandise inventory 30000 Account payable 30000 (To record purchase) Jan 21 Account receivable 40000 Sales revenue 40000 (To record sales) Jan 23 Account payable 30000 Cash (30000*98%) 29400 Merchandise inventory 600 (To record Amount paid) Jan 30 Cash (40000*99%) 39600 Sales discount 400 Account receivable 40000 (To record amount received)

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