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Springfield Company - Journalizing Transactions

1. Journalize and post the following transactions
2. Prepare a trial balance sheet.

The following were selected from among the transactions completed by Springfield Company during January of the current year.

Jan. 3. Purchased merchandise on account from Pynn Co., list price $16,000, trade

discount 35%, terms FOB shipping point, 2/10, n/30, with prepaid transportation costs of $320 added to the invoice.

Jan. 5. Purchased merchandise on account from Wilhelm Co., $8,000, terms FOB destination, 1/10, n/30.

Jan. 6. Sold merchandise on account to Sievert Co., list price $12,500, trade discount 40%, terms 2/10, n/30. The cost of the merchandise sold was $4,500.

Jan. 7. Returned $1,800 of merchandise purchased on January 5 from Wilhelm Co.

Jan. 13. Paid Pynn Co. on account for purchase of January 3, less discount.

Jan. 15. Paid Wihelm Co. on account for purchase of January 5, less return of January 7 and discount.

Jan. 16. Received cash on account from sale of January 6 to Sievert Co., less discount.

Jan. 19. Sold merchandise on nonbank credit cards and reported accounts to the card company, American Express, $6,450. The cost of the merchandise sold was $3,950.

Jan. 22. Sold merchandise on account to Elk River Co., $3, 480, terms 2/10, n/30. The cost of the merchandise sold was $1,400.

Jan. 23. Sold merchandise for cash, $9,350. The cost of the merchandise sold was $5,750.

Jan. 25. Received merchandise returned by Elk River Co. from sale on January 22, $1,480. The cost of the returned merchandise was $600.

Jan. 31. Received cash from American Express for nonbank credit card sales of January 19, less $225 service fee.

Solution Preview

Jan. 3. Purchased merchandise on account from Pynn Co., list price $16,000, trade
discount 35%, terms FOB shipping point, 2/10, n/30, with prepaid transportation costs of $320 added to the invoice.

Merchandise Inventory 10,720
Accounts Payable 10,720

($16,000 x 0.65) + $320 = $10,720

If the terms of sale are FOB (free on board) shipping point, the buyer bears the delivery costs.

Jan. 5. Purchased merchandise on account from Wilhelm Co., $8,000, terms FOB destination, 1/10, n/30.

Merchandise Inventory 8,000
Accounts Payable 8,000

Jan. 6. Sold merchandise on account to Sievert Co., list price $12,500, trade discount 40%, terms 2/10, n/30. The cost of the merchandise sold was $4,500.

Accounts ...

Solution Summary

This solution is comprised of a detailed explanation to journalize and post the transactions and prepare a trial balance sheet for Springfield Company.

$2.19