Recording Business Transaction

The following are the daily business transaction of Shehgarlynn Mini Mart:

January 1, 2013  bought $5,500 of merchandise on account, terms 3/10, 1/15, n/30, from Yosores Company,

Journal Entry

Merchandise Purchases                       $5,500.00
   Accounts Payable                                                       $5,500.00

January 5, 2013 Sales on credit to Gary Co. amounted to $2,500, terms 2/10, n/30.

Journal Entry

Accounts Receivable                           $2,500.00
   Sales                                                                              $2,500.00

January 10, 2013 Gary Co. return of $550.00 on goods sold on Jan. 5.

Journal Entry

Sales Returns and Allowances         $550.00
  Accounts Receivable                                           $550.00

January 14, 2013 Received a cash form Gary Co. in payment of the goods sold on Jan. 5.

Journal Entry

Cash                                          $1,911.00
Sales Discount                               39.00
  Accounts Receivable                                  1,950.00

Computation:
Cost of Goods Sold                             $2,500.00
Less: Sales Return and Allowances     550.00 
Total Sales ..................................$1,950.00
Discount Rate...............................      2%   
Sales Discount                                               39.00  

Sales                                    $1,950.00
Less: Sales Discount                39.00
Cash received                     $1,911.00

January 15, 2013 Sent a check # 025, amounting  to Yosores Co. in payment of purchase made on January 1,

Journal Entry

Accounts Payable                           $5,500.00
   Purchases Discount                                                     55.00
   Cash                                                                          $5,445.00

Computation:
Merchandise Purchases             $5,500.00
Discount Rate                                            1%   
Purchases Discount                               55.00

Merchandise Purchases             $5,500.00
Less:Purchases Discount                     55.00
Net Purchases                                   5,445.00

January 18, 2013 Purchased merchandise on credit to Shehlynn Co. for $7,500, terms 3/10, n/30.

Journal Entry

Merchandise Purchases                          $7,500.00
   Accounts Payable                                                          $7,500.00

January 20, 2013 Sales for the day amounted to $15,325.00

Journal Entry

Cash                                         $15,325.00
   Sales                                                                 $15,325.00

January 25, 2013 Some items purchased from Shehlyn Co. are returned amounted $1,750 in goods purchased on January 18.

Journal Entry

Accounts Payable                          $1,750.00
   Purchases Returns & Allowances                $1,750.00

January 29, 2013 Paid for freight charges on purchase of Jan. 1. amounting $150.

Journal Entry

Freight on Purchases                         $150.00
   Cash                                                                           $150.00

January 31, 2013 Paid to Shehlynn Co., the total amount in payment of purchase made on January 18.

Journal Entry

Accounts Payable                                $5,750.00
   Cash                                                                                $5,750.00

Computation

Merchandise Purchase                                $7,500.00
Less: Purchases Returns & Allowances    1,750.00
Net Purchases                                                  $5,750.00

Sales Return and Allowances

When the customer returning goods to a seller, she has the right to do so. The accountant establish the title of this account as Sales return and allowances.

Example:
Jerry return goods amounting of $300.

Journal Entry:

Sales Returns and Allowances            $300
  Cash                                                                          $300
To record the goods return and paid back cash $300