Reference no: EM132823107
Problem - Journal Entries for Merchandise Transactions-Perpetual System
Webb Company was established on July 1. Its sales terms are 3/10, n/30. Credit terms for its purchases vary with the supplier. Selected transactions for the first month of operations are given below. Unless noted, all transactions are on account and involve merchandise held for resale. Webb Company uses the perpetual inventory system.
July 1 Purchased goods from Dawson, Inc., $2,500; terms 1/10, n/30.
July 2 Purchased goods from Penn Company, $5,500; terms 2/10, n/30.
July 3 Paid freight on shipment from Dawson, $300.
July 5 Sold merchandise to Ward, Inc., $1,400 ($1,100 cost).
July 5 Paid freight on shipment to Ward, Inc., $90. (Hint: debit Delivery Expense).
July 8 Returned $700 worth of the goods purchased July 1 from Dawson, Inc., because some goods were damaged. Dawson approved the return.
July 9 Received returned goods from Ward, Inc., worth $200 ($150 cost).
July 10 Paid Dawson, Inc., the amount due.
July 10 Purchased goods from Dorn Company with a list price of $3,000. Terms 2/10, n/30.
July 11 Paid freight on shipment from Dorn Company, $150.
July 15 Received the amount due from Ward, Inc.
July 15 Sold merchandise to Colby Corporation, $3,200 ($2,400 cost).
July 16 Mailed a check to Penn Company for the amount due on its July 2 invoice.
July 18 Received an allowance of $250 from Dorn Company for defective merchandise purchased on July 10.
July 19 Paid Dorn Company the amount due.
July 25 Received the amount due from Colby Corporation.
Required - Prepare the necessary journal entries for the Webb Company.