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10 July, 10:25

At the beginning of July, CD City has a balance in inventory of $2,850. The following transactions occur during the month of July. July 3 Purchase CDs on account from Wholesale Music for $1,750, terms 2/10, n/30. July 4 Pay freight charges related to the July 3 purchase from Wholesale Music, $120. July 9 Return incorrectly ordered CDs to Wholesale Music and receive credit, $400. July 11 Pay Wholesale Music in full. July 12 Sell CDs to customers on account, $4,700, that had a cost of $2,450. July 15 Receive full payment from customers related to the sale on July 12. July 18 Purchase CDs on account from Music Supply for $2,550, terms 2/10, n/30. July 22 Sell CDs to customers for cash, $3,650, that had a cost of $1,950. July 28 Return CDs to Music Supply and receive credit of $190. July 30 Pay Music Supply in full.

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  1. 10 July, 11:47
    0
    Inventory 1750 debit

    Accounts Payable 1,750 credit

    --to record purchase--

    Inventory 120 debit

    Cash 120 credit

    --to record payment of freights--

    Accounts Payable 400 debit

    Inventory 400 credit

    --to record returned goods--

    Accounts Payable 1350 debit

    Inventory 27 credit

    Cash 1323 credit

    --to record payment within discount--

    Accounts Receivables 4700 debit

    Sales Revenues 4700 credit

    --to record sale--

    COGS 2450 debit

    Inventory 2450 credit

    --to record COGS of the previous sale--

    Cash 4700 debit

    Accounts Receivables 4700 credit

    --to record collection in full amount--

    Inventory 2550 debit

    Accounts Payable 2550 credit

    --to record purchase--

    Accounts Receivables 3650 debit

    Sales Revenues 3650 credit

    --to record sale--

    COGS 1950 debit

    Inventory 1950 credit

    --to record COGS of the previous sale--

    Accounts Payable 190 debit

    Inventory 190 credit

    --to record returned goods--

    Accounts Payable 2360 debit

    Inventory 47.2 credit

    Cash 2312.8 credit

    --to record payment within discount--

    Explanation:

    We reocrd each entry assuming the basic accounting principles

    debit = credit

    first purchase balance:

    1,750 less 400 return = 1,350

    discount 1,350 x 2% = 27

    cash outlay 1,350 - 27 = 1,323

    second purchase balance:

    2,550 less 190 = 2,360 balance

    discount 2,360 x 2% discount = 47.20

    cash outlay 2,360 - 47.20 = 2312.8
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