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21 April, 00:36

The following transactions are for Alonzo Company.

1. On December 3, Alonzo Company sold $500,000 of merchandise to Arte Co. on account. The cost of the merchandise sold was $330,000.

2. On December 8, Arte Co. returned $25,000 of merchandise purchased on December 3. The cost of the goods was $16,000.

3. On December 13, Alonzo Company received the balance due from Arte Co.

Prepare a tabular summary to record these transactions for Alonzo Company using a perpetual inventory system. (Enter negative amounts using either a negative sign preceding the number e. g. - 45 or parentheses e. g. (45).)

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  1. 21 April, 00:52
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    The Journal entries are as follows:

    1. On December 3,

    Accounts receivables A/c Dr. $500,000

    To sales A/c $500,000

    (To record the sales on account)

    Cost of goods sold A/c Dr. $330,000

    To merchandise inventory A/c $330,000

    (To record the cost of goods sold)

    2. On December 8,

    Sales return and allowance A/c Dr. $25,000

    To accounts receivable $25,000

    (To record the Sales return and allowance)

    3. On December 13,

    Cash A/c Dr. $470,250

    Sales discount A/c Dr. $4,750

    To accounts receivables $475,000

    (To record the balance due from Arte Co.)

    Workings:

    Sales discount = $475,000 * 0.01

    = $4,750

    Note: Terms 1/10 and n/30.

    Cash = accounts receivables - Sales discount

    = $475,000 - $4,750

    = $470,250
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