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.

Question

Business

Makayla Webster

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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Guillermo Wilkerson · Answer 1

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