Question

The following transactions are for Marin Company. 1. On December 3, Marin Company sold $492,200 of merchandise to Cullumber Co., on account, terms 2/10, n/30. The cost of the merchandise sold was $325,100. 2. On December 8, Cullumber Co. was granted an allowance of $22,900 for merchandise purchased on December 3. 3. On December 13, Marin Company received the balance due from Cullumber Co.a. Prepare the journal entries to record these transactions on the books of Oriole Company. Oriole Company uses a perpetual inventory system.b. Assume that Oriole Company received the balance due from Cullumber Co. on January 2 of the following year instead of December 13. Prepare the journal entry to record the receipt of payment on January 2.

Answer 1

Answer and Explanation:

The journal entries are shown below:

On Dec 3

Account receivable Dr $492,200

           To Sales Revenue $492,200

(being the goods sold on credit)

Cost of goods sold Dr $325,100

     To Inventory $325,100

(being the cost of the merchandise is recorded)

On Dec 8

Sales Returns and Allowances $22,900

      To Accounts Receivable $22,900

(Being the sales return & allowance is recorded)

On Dec 13

Cash $459,914

Sales Discounts  (2% of $469,300) $9,386

         To Accounts Receivable  ($492,200 - $22,900) $469,300

(being cash receipt is recorded)

On Jan 2

cash Dr ($492,200 - $22,900) $469,300

    To account receivable  $469,300

(being cash receipt is recorded)