Following are the merchandising transactions for chilton systems 1. On November
ID: 2421485 • Letter: F
Question
Following are the merchandising transactions for chilton systems
1. On November 1, Chilton systems purchases merchandise for $2000 on credit with terms of 2/5,n/30, FOB shipping point; invoice dated November 1st
2.On november 5, Chilton systems pays cash for the november 1st purchase
3. On november 7, chilton systems discovers and returns $125 of defective merchandise purchased on november 1st for a cash refund.
4.on november 10, chilton systems pays $100 cash for transportation costs with the november 1st purchase
5. On November 13, Chilton sysytems sells merchandise for $2160 on credit. The cost of the merchandise is $1080
6.On November 16, the customer returns merchandise from the November 1st transaction. The returned items are priced at $235 and cost $118; the items were not damaged and were returned to inventory.
Journalize the above merchandising transactions for Chilton Systems assuming it uses a perpetual inventory system
Explanation / Answer
Entries for closing inventory and profit are not provided since these are not specifically asked for
1-Nov Purchase 2,000.00 Sundry creditor 2,000.00 (Purchase of materials) 5-Nov Sundry creditor 2,000.00 5-Nov Cash Paid 1,960.00 5-Nov Discount 40.00 (Cash paid against purchase eligible for Discount) 7-Nov Cash received 122.50 Discount 2.50 Purchase 125.00 (Being defective materials returned) 10-Nov Carriage Inward 100.00 Cash 100.00 (Being cash paid for transportation of purchased materials) 13-Nov Debtors 2,160.00 Sales 2,160.00 (Being credit sales) 16-Nov Sales Return 235.00 Debtors 235.00 (being goods returned)