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17 September, 04:36

Campus Stop, Inc., is a student co-op. Campus Stop uses a perpetual inventory system. The following transactions (summarized) have been selected for analysis: a. Sold merchandise for cash (cost of merchandise $141,870). $ 253,000 b. Received merchandise returned by customers as unsatisfactory (but in perfect condition) for cash refund (original cost of merchandise $650). 1,600 c. Sold merchandise (costing $4,500) to a customer on account with terms n/30. 10,000 d. Collected half of the balance owed by the customer in (c). 5,000 e. Granted a partial allowance relating to credit sales the customer in (c) had not yet paid. 1,600 Prepare journal entries to record transactions (a) - (e). (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

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  1. 17 September, 05:00
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    See explanation section

    Explanation:

    Requirement A

    Cash Debit $253,000

    Sales revenue credit $253,000

    Note: To record the sales on cash with no terms and conditions

    Cost of goods sold debit $141,870

    Merchandise inventory credit $141,870

    Note: As the company uses a perpetual inventory system, the company records the cost of merchandise inventory journals.

    Requirement B

    Customer refunds payable debit $1,600

    Cash credit $1,600

    Note: Campus Stop, Inc. refunded cash to the customer because of unsatisfactory merchandise.

    Merchandise inventory debit $650

    Estimated returns inventory credit $650

    Note: As the company uses a perpetual inventory system, the company records the cost of merchandise inventory returned journals.

    Requirement C.

    Accounts receivable debit $10,000

    Sales revenue credit $10,000

    Note: To record the sales on account with no discounting terms but has to receive the payment within 30 days.

    Cost of goods sold debit $4,500

    Merchandise inventory credit $4,500

    Note: As the company uses a perpetual inventory system, the company records the cost of merchandise inventory journals.

    Requirement D and E.

    D. Cash Debit $5,000

    Accounts receivable Credit $5,000

    Note: Collected half of the balance owed by the customer in transaction c.

    E. Cash debit $3,400

    Merchandise inventory debit $1,600

    Accounts receivable credit $5,000

    Note: Receive the remaining payment from the customer by granting a discount assuming the buyer paid the remaining part earlier than expected.
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