Following are the merchandising transactions for Dollar Store.
a) Nov. 1 Dollar Store purchases merchandise for $1,100 on terms of 2/5, n/30, FOB shipping point, invoice dated November 1.
b) 5 Dollar Store pays cash for the November 1 purchase.
c) 7 Dollar Store discovers and returns $100 of defective merchandise purchased on November 1, and paid for on November 5, for a cash refund.
d) 10 Dollar Store pays $55 cash for transportation costs for the November 1 purchase.
e) 13 Dollar Store sells merchandise for $1,188 with terms n/30. The cost of the merchandise is $594.
f) 16 Merchandise is returned to the Dollar Store from the November 13 transaction. The returned items are priced at $270 and cost $135; the items were not damaged and were returned to inventory.
Required:
Journalize the above merchandising transactions for the Dollar Store assuming it uses a perpetual inventory system and the gross method.

Answer and Explanation:

The Journal entry is shown below:-

a. Merchandise Inventory Dr, 1,100

             To Accounts Payable $1,100

(Being purchase of inventory is recorded)

b. Accounts Payable Dr, $1,100

Merchandise Inventory Dr, $22 ($1,100 × 2%)

                   To Cash $1,122

(Being cash paid is recorded)

c. Cash Dr, $98 (100 × 98%)

             To Merchandise Inventory $98

(Being cash receipts is recorded)

d. Merchandise Inventory Dr, $55

          To Cash $55

(Being cash paid is recorded)

e. Cost of goods sold Dr, $594

            To Merchandise Inventory $594

(Being cost of goods sold is recorded)

f. Sales Returns and allowances Dr, $270

             To Account Receivables $270

(Being sales returns and allowances is recorded)

g. Merchandise Inventory Dr, $135

             To Cost of goods sold $135

(Being cost of returned goods  is recorded)

b. a single paragraph.

a paragraph is a series of sentences that are organized and make sense, and are all related to a single topic . almost every piece of writing you do that is longer than a few sentences should be organized into paragraphs. this is because paragraphs show a reader where the subdivisions of an essay begin and end, and thus the reader see the organization of the essay into subjects in order to be able to understand its main points.