Heath Enterprises operates a chain of retail stores in California specializing in paintings by local artists. Heath uses a perpetual inventory system and the specific identification method to determine cost of goods sold. During the month of July, the following transactions occurred:
July 3 Sold a $ 1,500 painting to Dawn Associates on account, terms 2 10, n 30. The painting had a cost of $ 800.
6 Received a $ 1,000 deposit from D& W Industries for a painting that was to be reframed. The balance of $ 500 will be collected at the time of pickup.
10 Sold a painting for $ 950 cash. The painting had a cost of $ 320.
12 Received payment from Dawn Associates for the painting purchased on July 3, less the applicable discount.
15 D& W picked up the reframed painting and paid the balance due.
17 Sold a $ 3,200 painting to Universal Corporation on account, terms 1 10, n 60. The painting had a cost of $ 1,100.
20 Universal requested a reduction in the price of the painting because of a defect in the frame. Heath granted a $ 200 allowance to Universal.
27 Received payment from Universal for the July 17 sale, less the allowance and the discount.
A. Prepare journal entries to record these transactions.
B. Determine the total amount of net revenue reported by Heath for the month of July. What is the gross margin for July?

  • CreatedMarch 25, 2015
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