Shehgarlynn Mini Mart

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 from 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

Cost of Good Sold

The cost will be recognized as an expense.

Shehgarlynn Mini Mart

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

January 1, 2013  bought $6,500 of merchandise on account, terms 3/10, 2/15, n/30, from Yosores Company,

January 3, 2013 Sales on credit to Gary Co. amounted to $3,750, terms 2/10, n/30.

January 10, 2013 Gary Co. return of $570.00 on goods sold on Jan. 3, 2013

January 14, 2013 Received a cash from Gary Co. in payment of the goods sold on Jan. 3.

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

January 18, 2013 Purchased merchandise on credit to Shehlynn Co. for $8,500, terms 3/10, 2/15, n/30.
                                     
January 25, 2013 Some items purchased from Shehlynn Co. are returned amounted $950 in goods purchased on January 18.

January 29, 2013 Paid for freight charges on purchase of Jan. 1. amounting $250.
                                     
January 31, 2013 Paid to Shehlynn Co., the total amount in payment of purchase made on January 18.

Prepare the Net Income of Shehgarlynn Mini Mart

Cash Payment Journal

A journal that records all transactions involving the payment of cash regardless of the reason. Is used any time that there is an outlay of cash. Cash payments will automatically call for the use of this multicolumn special journal.

Purchases Returns and Allowances

A contra or negative account that offsets the merchandise purchases account. When goods previously purchased are returned, the entry for the return causes a credit to be recorded in this contra-account.

Purchases Returns and Allowances Journal

A journal used by the seller of goods to acknowledge the receipt of a credit memorandum from the seller authorizing the return of goods and the reduction or elimination of the buyer's obligation to the seller.

Prepaid Expense

An asset account --an item that normally is considered to be an expense but, because it is paid in advance, is classified as an asset. When the value of the asset has been used up, an adjusting entry will convert this prepaid expense (asset) to an actual expense.

Purchases Journal

A journal that records all purchases on credit. This special journal is a multicolumn journal.

Cash Receipts Journal

A journal that records all transactions involving the receipt of cash regardless of the source. These sales, as well as other transactions causing an inflow of cash.

Special Journal

A book of original entry in which all transactions of a similar nature, such as credit sales or credit purchases are recorded.

Sales Returns and Allowances Journal

A journal used by the seller of goods to record the issuance of a credit memorandum, which services as evidence of the return of merchandise to the seller, giving the buyer credit for the return.

Sales Journal

Sales Journal - A journal that records all sales of goods and/ or services may be made for cash or on credit.

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 Discount

Terms - "2/10, n/30" - Maybe be offered

2/10  mean 2% discount will be given if the obligation is paid within 10 days of the invoice date, on the entire amount.

n/30 = mean that the entire obligation, Net (n), is due the seller with in 30 days of the invoice.

The sales discount is offered but the seller, but it is the buyer who exercises the option of taking the cash discount or not.

Example:

January 2, 2013, Gary Company sales on credit amounted to $5,150 of merchandise to Shehgarlynn Supermarket, terms 5/10, n/30.  On January 9, 2013, Gary's Co. received a cash from Shehgarlynn Supermarket in payment of the account last Jan. 2, 2013.
Computation:

Cost of Merchandise          $5,150.00
Discount                                      5%     
Sales Discount                         257.50

Journal Entries: Books of the Seller

January 2, 2013  Accounts Receivable        $5,150.00
                                      Sales                                                            $5,150.00
                                   To record sales on credit, amounted $5,150, terms offered 5/10, n/30


January 9, 2013  Cash                                $4,892.50
                                    Sales Discount                   257.50
                                       Accounts Receivable                    $5,150.00
                                  To record the payment of Shehgarlynn account.        
                                                                                                                                     

Purchases Discount

Terms - "2/10, n/30" - Maybe be offered

2/10  mean 2% discount will be given if the obligation is paid within 10 days of the invoice date, on the entire amount.

n/30 = mean that the entire obligation, Net (n), is due the seller with in 30 days of the invoice.

The sales discount is offered but the seller, but it is the buyer who exercises the option of taking the cash discount or not.

Example:

January 2, 2013, Shehgarlynn Supermarket bought $5,150 of merchandise to Gary Company on credit, terms 5/10, n/30.  On January 9, 2013, Shehgarlynn paid cash for the goods.

Computation:

Cost of Merchandise          $5,150.00
Discount                                      5%     
Purchases Discount                 257.50


Journal Entries: Books of the Buyer

January 2, 2013  Merchandise Purchases        $5,150.00
                                      Accounts Payable - Gary Co.                         $5,150.00
                                   To record purchases of merchandise, terms offered 5/10, n/30


January 9, 2013  Accounts Payable - Gary Co.   $5,150.00
                                       Cash                                                                        $4,892.50
                                       Purchases discount                                                 257.50
                                   To record the payment of merchandise.

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

Recording Sales

On January 10, 2013 Shehgarlynn Mini Mart, total sales of merchandise amounting of $13,000; the cashier count the total cash receipt amounting of $10,500, and the rest of sales on account.

Journal Entry:

Jan. 10, 2013   Cash ...........................              $10,500
                               Accounts Receivable ......             2,500
                                   Sales .................................                    $13,000
                                To record the merchandise sold for the day.

                                                       Or


Jan. 10, 2013   Cash .............................     $10,500
                                  Sales ...................................             $10,500
                                To record the merchandise sold for cash

                              Account Receivable - Credit Card ........  $2,500
                                Sales ..................................................                  $2,500
                               To record the merchandise sold on credit.

Determining the Cost of Goods Available for Sale

Merchandise Inventory, Beg.                                                           $19,130
Purchases                                                                                  89,950
Less: Purchases Returns And Allowances    9,750
            Purchases Discount                                 11,300   21,050
Total                                                                                            68,900
Add: Freight on Purchases                                                    1,570
Net Purchases                                                                                           70,470
Cost of Goods Available for Sale                                89,600

Determining the Cost of Merchandise Sold

Cost of Merchandise Available for Sale ...................$89,600
Less: Merchandise Inventory, End ........................      13,750
Cost of Goods Sold .............................................        75,850

Determining Net Sales

Revenue

   Gross Sale ............................................................. $150,000
   Less: Sales Returns and Allowances ....... $5,155
              Sales Discount .......................             1,350               6,585
   Net Sales ...........................................................  ...$143,495