Question

Biloxi Gifts uses a sales journal, a purchases journal, a cash receipts journal, a cash disbursements journal, and a general journal. The November transactions are given below:
Nov. 2 The company purchased $2,600 of merchandise on credit from the Midland Co., terms 2/10, n/30.
12
The owner, T. Biloxi, contributed an automobile worth $17,000 to the company.

16 The company sold $1,200 of merchandise (cost is $800) on credit to K. Myer, terms n/30.
19
K. Myer returned $175 of (worthless) merchandise to the company originally purchased on November 16 (assume the cost of this merchandise is left in cost of goods sold).

Journalize November transactions that should be recorded in the general journal. (If the transaction is not recorded in the general journal, select "Not recorded in general journal" in the first account field.)

Answer 1

Solution and Explanation:

The following journal entries are passed in the books of accounts.

Purchase of merchandise on credit - no entry is to be passed

Contribution of automobile to the company:

Date           Details                      debit                 credit

12- nov     Automobiles          17000

                      TB Capital                                      17000

( To record contribution of automobile to the company)

Sale of merchandise on credit:

Not recorded in gernal journal

Return of merchandise sold:

Date           Details                                            debit                 credit

19- Nov       Sales return and allowances      175

                     accounts receivable - KM                                 175