Concept explainers
The following selected transactions were completed by Amsterdam Supply Co., which sells office supplies primarily to wholesalers and occasionally to retail customers:
Instructions
Record the sale transactions of the company.
Explanation of Solution
Sales is an activity of selling the merchandise inventory of a business.
Record the journal entry for the sale of inventory on account.
Date | Accounts and Explanation | Debit ($) | Credit ($) |
March 2 | Accounts receivable | 18,711 (1) | |
Sales Revenue | 18,711 | ||
(To record the sale of inventory on account) |
Table (1)
- Accounts Receivable is an asset and it is increased by $18,711. Therefore, debit accounts receivable with $18,711.
- Sales revenue is revenue and it increases the value of equity by $18,711. Therefore, credit sales revenue with $18,711.
Working Note (1):
Calculate the amount of accounts receivable.
Sales = $18,900
Discount percentage = 1%
Record the journal entry for cost of goods sold.
Date | Accounts and Explanation | Debit ($) | Credit ($) |
March 2 | Cost of Merchandise Sold | 13,300 | |
Merchandise Inventory | 13,300 | ||
(To record the cost of goods sold) |
Table (2)
- Cost of merchandise sold is an expense account and it decreases the value of equity by $13,300. Therefore, debit cost of merchandise sold account with $13,300.
- Merchandise Inventory is an asset and it is decreased by $13,300. Therefore, credit inventory account with $13,300.
Record the journal entry for the sale of inventory for cash.
Date | Accounts and Explanation | Debit ($) | Credit ($) |
March 3 | Cash | 12,031 (3) | |
Sales Revenue | 11,350 | ||
Sales Tax Payable | 681 (2) | ||
(To record the sale of inventory for cash) |
Table (3)
- Cash is an asset and it is increased by $12,031. Therefore, debit cash account with $12,031.
- Sales revenue is revenue and it increases the value of equity by $11,350. Therefore, credit sales revenue with $11,350.
- Sales tax payable is a liability and it is increased by $681. Therefore, credit sales tax payable account with $681.
Working Notes(2):
Calculate the amount of sales tax payable.
Sales revenue = $11,350
Sales tax percentage = 6%
Working Notes(3):
Calculate the amount of cash received.
Sales revenue = $11,350
Sales tax payable = $681 (2)
Record the journal entry for cost of goods sold.
Date | Accounts and Explanation | Debit ($) | Credit ($) |
March 3 | Cost of Merchandise Sold | 7,000 | |
Merchandise Inventory | 7,000 | ||
(To record the cost of goods sold) |
Table (4)
- Cost of merchandise sold is an expense account and it decreases the value of equity by $7,000. Therefore, debit cost of merchandise sold account with $7,000.
- Merchandise Inventory is an asset and it is decreased by $7,000. Therefore, credit inventory account with $7,000.
Record the journal entry for the sale of inventory on account.
Date | Accounts and Explanation | Debit ($) | Credit ($) |
March 4 | Accounts receivable | 55,400 | |
Sales Revenue | 55,400 | ||
(To record the sale of inventory on account) |
Table (5)
- Accounts Receivable is an asset and it is increased by $55,400. Therefore, debit accounts receivable with $55,400.
- Sales revenue is revenue and it increases the value of equity by $55,400. Therefore, credit sales revenue with $55,400.
Record the journal entry for cost of goods sold.
Date | Accounts and Explanation | Debit ($) | Credit ($) |
March 4 | Cost of Merchandise Sold | 33,200 | |
Merchandise Inventory | 33,200 | ||
(To record the cost of goods sold) |
Table (6)
- Cost of merchandise sold is an expense account and it decreases the value of equity by $33,200. Therefore, debit cost of merchandise sold account with $33,200.
- Merchandise Inventory is an asset and it is decreased by $33,200. Therefore, credit inventory account with $33,200.
Record the journal entry for the sale of inventory for cash.
Date | Accounts and Explanation | Debit ($) | Credit ($) |
March 5 | Cash | 31,800 (5) | |
Sales Revenue | 30,000 | ||
Sales Tax Payable | 1,800 (4) | ||
(To record the sale of inventory for cash) |
Table (7)
- Cash is an asset and it is increased by $31,800. Therefore, debit cash account with $31,800.
- Sales revenue is revenue and it increases the value of equity by $30,000. Therefore, credit sales revenue with $30,000.
- Sales tax payable is a liability and it is increased by $1,800. Therefore, credit sales tax payable account with $1,800.
Working Note (4):
Calculate the amount of sales tax payable.
Sales revenue = $30,000
Sales tax percentage = 6%
Working Note (5):
Calculate the amount of cash received.
Sales revenue = $30,000
Sales tax payable = $1,800 (2)
Record the journal entry for cost of goods sold.
Date | Accounts and Explanation | Debit ($) | Credit ($) |
March 5 | Cost of Merchandise Sold | 19,400 | |
Merchandise Inventory | 19,400 | ||
(To record the cost of goods sold) |
Table (8)
- Cost of merchandise sold is an expense account and it decreases the value of equity by $19,400. Therefore, debit cost of merchandise sold account with $19,400.
- Merchandise Inventory is an asset and it is decreased by $19,400. Therefore, credit inventory account with $19,400.
Record the journal entry for the cash receipt against accounts receivable.
Date | Accounts and Explanation | Debit ($) | Credit ($) |
March 12 | Cash | 18,711 | |
Accounts Receivable | 18,711 | ||
(To record the receipt of cash against accounts receivables) |
Table (9)
- Cash is an asset and it is increased by $18,711. Therefore, debit cash account with $18,711.
- Accounts Receivable is an asset and it is increased by $18,711. Therefore, debit accounts receivable with $18,711.
Record the journal entry for the sale of inventory for cash.
Date | Accounts and Explanation | Debit ($) | Credit ($) |
March 14 | Cash | 13,700 | |
Sales Revenue | 13,700 | ||
(To record the sale of inventory for cash) |
Table (10)
- Cash is an asset and it is increased by $13,700. Therefore, debit cash account with $13,700.
- Sales revenue is revenue and it increases the value of equity by $13,700. Therefore, credit sales revenue with $13,700.
Record the journal entry for cost of goods sold.
Date | Accounts and Explanation | Debit ($) | Credit ($) |
March 14 | Cost of Merchandise Sold | 8,350 | |
Merchandise Inventory | 8,350 | ||
(To record the cost of goods sold) |
Table (11)
- Cost of merchandise sold is an expense account and it decreases the value of equity by $8,350. Therefore, debit cost of merchandise sold account with $8,350.
- Merchandise Inventory is an asset and it is decreased by $8,350. Therefore, credit inventory account with $8,350.
Record the journal entry for the sale of inventory on account.
Date | Accounts and Explanation | Debit ($) | Credit ($) |
March 16 | Accounts receivable | 27,225 (6) | |
Sales Revenue | 27,225 | ||
(To record the sale of inventory on account) |
Table (12)
- Accounts Receivable is an asset and it is increased by $27,225. Therefore, debit accounts receivable with $27,225.
- Sales revenue is revenue and it increases the value of equity by $27,225. Therefore, credit sales revenue with $27,225.
Working Note (6):
Calculate the amount of accounts receivable.
Sales = $27,500
Discount percentage = 1%
Record the journal entry for cost of goods sold.
Date | Accounts and Explanation | Debit ($) | Credit ($) |
March 16 | Cost of Merchandise Sold | 16,000 | |
Merchandise Inventory | 16,000 | ||
(To record the cost of goods sold) |
Table (13)
- Cost of merchandise sold is an expense account and it decreases the value of equity by $16,000. Therefore, debit cost of merchandise sold account with $16,000.
- Merchandise Inventory is an asset and it is decreased by $16,000. Therefore, credit inventory account with $16,000.
Record the journal entry for sales return.
Date | Account Title and Explanation |
Post Ref. |
Debit ($) |
Credit ($) |
March 18 | Customer Refunds Payable | 4,752 (7) | ||
Accounts Receivable | 4,752 | |||
(To record sales returns) |
Table (14)
- Customer refunds payable is a liability account and it is decreased by $4,752. Therefore, debit customer refunds payable account with $4,752.
- Accounts Receivable is an asset and it is decreased by $4,752. Therefore, credit account receivable with $4,752.
Working Note (7):
Calculate the amount of refund owed to the customer.
Sales return = $4,800
Discount percentage = 1%
Record the journal entry for the return of the merchandise.
Date | Accounts and Explanation | Debit ($) | Credit ($) |
March 18 | Merchandise Inventory | 2,900 | |
Estimated Returns Inventory | 2,900 | ||
(To record the return of the merchandise) |
Table (15)
- Merchandise Inventory is an asset and it is increased by $2,900. Therefore, debit inventory account with $2,900.
- Estimated retunrs inventory is an expense account and it increases the value of equity by $2,900. Therefore, credit estimated returns inventory account with $2,900.
Record the journal entry for the sale of inventory on account.
Date | Accounts and Explanation | Debit ($) | Credit ($) |
March 19 | Accounts receivable | 8,085 (8) | |
Sales Revenue | 8,085 | ||
(To record the sale of inventory on account) |
Table (16)
- Accounts Receivable is an asset and it is increased by $8,085. Therefore, debit accounts receivable with $8,085.
- Sales revenue is revenue and it increases the value of equity by $8,085. Therefore, credit sales revenue with $8,085.
Working Note (8):
Calculate the amount of accounts receivable.
Sales = $8,250
Discount percentage = 2%
Record the journal entry.
Date | Account Title and Explanation |
Post Ref. |
Debit ($) |
Credit ($) |
March 19 | Accounts Receivable | 75 | ||
Cash | 75 | |||
(To record freight charges paid) |
Table (17)
- Accounts Receivable is an asset and it is increased by $75. Therefore, debit accounts receivable with $75.
- Cash is an asset and it is decreased by $75. Therefore, credit cash account with $75.
Record the journal entry for cost of goods sold.
Date | Accounts and Explanation | Debit ($) | Credit ($) |
March 19 | Cost of Merchandise Sold | 5,000 | |
Merchandise Inventory | 5,000 | ||
(To record the cost of goods sold) |
Table (18)
- Cost of merchandise sold is an expense account and it decreases the value of equity by $5,000. Therefore, debit cost of merchandise sold account with $5,000.
- Merchandise Inventory is an asset and it is decreased by $5,000. Therefore, credit inventory account with $5,000.
Record the journal entry for the cash receipt against accounts receivable.
Date | Accounts and Explanation |
Debit ($) | Credit ($) |
March 26 | Cash | 22,473 (9) | |
Accounts Receivable | 22,473 | ||
(To record the receipt of cash against accounts receivables) |
Table (19)
- Cash is an asset and it is increased by $22,473. Therefore, debit cash account with $22,473.
- Accounts Receivable is an asset and it is increased by $22,473. Therefore, debit accounts receivable with $22,473.
Working Note (9):
Calculate the amount of cash received.
Net accounts receivable = $22,473
Customer refunds payable = $4,752
Record the journal entry for the cash receipt against accounts receivable.
Date | Accounts and Explanation |
Debit ($) | Credit ($) |
March 28 | Cash | 8,160 (10) | |
Accounts Receivable | 8,160 | ||
(To record the receipt of cash against accounts receivables) |
Table (20)
- Cash is an asset and it is increased by $8,160. Therefore, debit cash account with $8,160.
- Accounts Receivable is an asset and it is increased by $8,160. Therefore, debit accounts receivable with $8,160.
Working Note (10):
Calculate the amount of cash received.
Net accounts receivable = $8,085
Freight charges = $75
Record the journal entry for the cash receipt against accounts receivable.
Date | Accounts and Explanation |
Debit ($) | Credit ($) |
March 31 | Cash | 55,400 | |
Accounts Receivable | 55,400 | ||
(To record the receipt of cash against accounts receivables) |
Table (21)
- Cash is an asset and it is increased by $55,400. Therefore, debit cash account with $55,400.
- Accounts Receivable is an asset and it is increased by $55,400. Therefore, debit accounts receivable with $55,400.
Record the journal entry for delivery expense.
Date | Accounts and Explanation | Debit ($) | Credit ($) |
March 31 | Delivery expense | 5,600 | |
Cash | 5,600 | ||
(To record the payment of delivery expenses) |
Table (22)
- Delivery expense is an expense account and it decreases the value of equity by $5,600. Therefore, debit delivery expense account with $5,600.
- Cash is an asset and it is decreased by $5,600. Therefore, credit cash account with $5,600.
Record the journal entry for credit card expense.
Date | Accounts and Explanation | Debit ($) | Credit ($) |
April 3 | Credit card expense | 940 | |
Cash | 940 | ||
(To record the payment of credit card expenses) |
Table (23)
- Credit card expense is an expense account and it decreases the value of equity by $940. Therefore, debit credit card expense account with $940.
- Cash is an asset and it is decreased by $940. Therefore, credit cash account with $940.
Record the journal entry for credit card expense.
Date | Accounts and Explanation | Debit ($) | Credit ($) |
April 15 | Sales tax payable | 6,544 | |
Cash | 6,544 | ||
(To record the payment of credit card expenses) |
Table (24)
- Sales tax payable is a liability account and it is decreased by $6,544. Therefore, debit customer refunds payable account with $6,544.
- Cash is an asset and it is decreased by $6,544. Therefore, credit cash account with $6,544.
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