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23 December, 07:40

The following transactions are for Kingbird Company.

1. On December 3, Kingbird Company sold $473,800 of merchandise to Blossom Co., on account, terms 2/10, n/30. The cost of the merchandise sold was $320,000.

2. On December 8, Blossom Co. was granted an allowance of $22,800 for merchandise purchased on December 3.

3. On December 13, Kingbird Company received the balance due from Blossom Co.

Required:

a. Prepare the journal entries to record these transactions on the books of Kingbird Company. Kingbird uses a perpetual inventory system.

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Answers (1)
  1. 23 December, 11:25
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    a. The journal entries to record the transactions woule be the following:

    To record the sales

    3 dec Debit Credit

    Account receivables $473,800

    Sales $473,800

    To record the cost of goods sold

    cost of goods sold $320,000

    Merchandise Inventory $320,000

    To record the allowance

    8 dec Debit Credit

    Sales return and allowance $22,800

    Accounts receivable $22,800

    To record the cash received from the customer

    13 dec Debit Credit

    Cash $446,490

    Sales discount $4,510

    Accounts receivable $451,000

    Explanation:

    a. The journal entries to record the transactions woule be the following:

    First we have to prepare the journal entry to record the sales and cost of goods sold according to the given dа ta:

    To record the sales

    3 dec Debit Credit

    Account receivables $473,800

    Sales $473,800

    To record the cost of goods sold

    cost of goods sold $320,000

    Merchandise Inventory $320,000

    Next we have to Prepare the journal entry to record the allowance as follows:

    To record the allowance

    8 dec Debit Credit

    Sales return and allowance $22,800

    Accounts receivable $22,800

    Finally we have to Prepare the journal entry to record the cash received from the customer as follows:

    To record the cash received from the customer

    13 dec Debit Credit

    Cash $446,490

    Sales discount $4,510

    Accounts receivable $451,000

    Cash=$451,000-$4,510=$446,490

    Sales discount=$451,000*1%=$4,510

    Accounts receivable=$473,800 - $22,800=$451,000
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