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20 October, 15:29

The following transactions are for Kingbird Company. 1. On December 3, Kingbird Company sold $450,000 of merchandise to Blossom Co., on account, terms 1/10, n/30. The cost of the merchandise sold was $310,000.2. On December 8, Blossom Co. was granted an allowance of $22,000 for merchandise purchased on December 3.3. On December 13, Kingbird Company received the balance due from Blossom Co. Instruction:Prepare the journal entries to record these transactions on the books of Mack Company. Mack uses a perpetual inventory system.

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  1. 20 October, 16:42
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    Kingbird Company or Mack Company

    Journal Entries:

    Dec. 3:

    Debit Accounts Receivable (Blossom Co.) $450,000

    Credit Sales Revenue $450,000

    To record the sale of goods on account, terms 1/10, n/30.

    Debit Cost of Goods Sold $310,000

    Credit Inventory Account $310,000

    To record the cost of goods sold.

    Dec. 8:

    Debit Sales Allowance $22,000

    Credit Accounts Receivable (Blossom Co.) $22,000

    To record the allowance granted.

    Dec. 13:

    Debit Cash Account $423,720

    Debit Cash Discount $4,280

    Credit Accounts Receivable (Blossom Co.) $428,000

    To record the settlement of account.

    Explanation:

    Journal entries are used to record transactions that occur on a daily basis. They are usually the first set of records made in the accounting books. They show the accounts to be debited and the accounts to be credited. Each transaction is usually debited in one account and credited in another to reflect the double entry system of accounting and to keep the accounting equation in balance.
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