Prepare the journal entries to record the following transactions on Horst Compan

Question

Prepare the journal entries to record the following transactions on Horst Company’s books using a perpetual inventory system. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)

(a) On March 2, Horst Company sold $906,100 of merchandise to Bernadina Company, terms 3/10, n/30. The cost of the merchandise sold was $579,500. (b) On March 6, Bernadina Company returned $108,600 of the merchandise purchased on March 2. The cost of the merchandise returned was $65,430. (c) On March 12, Horst Company received the balance due from Bernadina Company.

Explanation / Answer

Journal entries to record the following transactions on Horst Company 's books using a perpetual inventory system is as follows:

Date Particulars l.F Amount ($) Amount ($) (a) 2-Mar Accounts receivable-Bernadina Co 906,100    Sales 906,100 (For goods sold on credit terms 3/10,n/30) (a) 2-Mar Cost of goods sold 579,500    Merchandise Inventory 579,500 (For cost of sales recorded) (b) 6-Mar Sales return 108,600    Accounts receivable-Bernadina Co 108,600 (For goods returned) (b) 6-Mar Merchandise Inventory 65,430    Cost of goods sold 65,430 (For cost of sales return recorded) (c ) 12-Mar Cash 773,575 Sales Discount 23,925    Accounts receivable-Bernadina Co 797,500 (For cash received from Bernadina Co.)

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