The following transactions were selected from those occurring during the month of January 2014 for Dan’s Store Inc. A wide variety of goods is offered for sale. Credit sales are extended to a few select customers; the usual credit terms are n/ EOM (end of the month). The cost of sales is always one- half of the gross sales price.
a. Sales to customers:
Cash, $ 228,000
Credit, $ 72,000
b. Unsatisfactory merchandise returned by customers:
Cash, $ 3,000
Credit, $ 2,000
c. Purchased merchandise from vendors on credit; terms 2/ 10, n/ 30:
i. Amount billed by Amy Supply Company, $ 4,000
ii. Amount billed by other vendors, $ 68,000
d. Paid freight on merchandise purchased $ 1,500 cash
e. Collections on trade receivables, $ 36,000
f. Paid trade payables in full during the period as follows:
i. Amy Supply Company after the discount period, $ 4,000
ii. Paid other vendors within the discount period, $ 66,640
g. Paid $ 1,000 for two new laptop computers for the office
Required:
Prepare journal entries for these transactions, assuming that a perpetual inventory system is used. Record inventory purchases by using the gross method.