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    Dazzle Book Warehouse

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    Dazzle Book Warehouse distributes hardbacks books to retail stores and extends credit terms of 2/10, n/30 to all of its customers. At the end of May, Dazzle's inventory consisted of 240 books purchased at $1,200. During the month of June the following merchandising transactions occurred.

    June 1 Purchased 130 books on account for $5 each from Reader's World Publishers,
    FOB destination, terms1/10, n/30. The appropriate party also made a cash
    Payment of $50 for the freight on this date.
    3 Sold 140 books on account to the Book Nook for $10 each.
    6 Received $50 credit for 10 books return to Reader's World Publishers.
    9 Paid Reader's World Publishers in full, less discount.
    15 Received payment in full from the Book Nook.
    17 Sold 120 books on account to Read-A-Lot Bookstore for $10 each.
    20 Purchased120 books on account for $5 each from Read More publishers,
    FOB destination, terms 2/15, n/30. The appropriate party also made a cash
    Payment of $50 for the freight on this date.
    24 Received payment in full from Read-A-Lot Bookstore.
    25 Paid Read More Publishers in full, less discount.
    28 Sold 110 books on account to Readers Bookstore for $10 each
    30 Granted Readers Bookstore $150 credit for 15 books returned costing $75.

    Dazzel Book Warehouse's chart of accounts includes the following: No. 101 Cash,
    No. 112 Accounts Receivable, No. 120 Merchandise Inventory, No. 201 Accounts Payable,
    No. 401 Sales, No. 412 Sales Returns and Allowances, No. 414 Sales Discounts,
    No. 505 Cost of Goods Sold.

    Instructions: Journalize the transaction for the month of June for Dazzle Book Warehouse
    Using a perpetual inventory system.

    © BrainMass Inc. brainmass.com June 3, 2020, 6:47 pm ad1c9bdddf
    https://brainmass.com/business/accounting/dazzle-book-warehouse-74948

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    Dazzle Book Warehouse

    Dazzle Book Warehouse distributes hardbacks books to retail stores and extends credit terms of 2/10, n/30 to all of its customers. At the end of May, Dazzle's inventory consisted of 240 books purchased at $1,200. During the month of June the following merchandising transactions occurred.

    June 1 Purchased 130 books on account for $5 each from Reader's World Publishers,
    FOB destination, terms1/10, n/30. The appropriate party also made a cash
    Payment of $50 for the freight on this date.

    Since it is FOB destination, the freight would be paid by the shipper. 130 books at $5=650. The entry is

    Jun-01 Merchandise Inventory Dr 120 650
    Accounts Payable 201 650

    3 Sold 140 books on account to the Book Nook for $10 each.

    Sales are 140X10=1,400. The cost of goods sold will be 140X5, which is the cost price. The entry is
    Jun-03 Accounts Receivable Dr 112 1,400
    ...

    Solution Summary

    The solution explains the preparation of journal entries given the transactions.

    $2.19

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