Reference no: EM131672022

Question - Journalize purchase and sales transactions under a perpetual inventory system

Powell's Book Warehouse distributes hardcover books to retail stores and extend credit terms of 2/10, n/30 to all of its customers. At the end of May, Powell's inventory consisted of books purchased for $1,800. During June, the following merchandising transactions occurred.

June 1 Purchased books on account for $1,600 from Kline Publishers, FOB destination, terms 2/10, n/30. The appropriate party also made a cash payment of $50 for the freight on this date.

June 3 Sold books on account to Reading Rainbow for $2,500. The cost of the books sold was $1,440.

June 6 Received $100 credit for books returned to Kline Publishers.

June 9 Paid Kline Publishers in full, less discount.

June 15 Received payment in full from Reading Rainbow.

June 17 Sold books on account to Blanco Books for $1,800. The cost of the books sold was $1,080.

June 20 Purchased books on account for $1,500 from Dietz Publishers, FOB destination, terms 2/15,n/30. The appropriate party also made a cash payment of $50 for the freight on this date.

June 24 Received payment in full from Blanco Books.

June 26 Paid Dietz Publishers in full less discount.

June 28 Sold books on account to Reddy Bookstore for $1,400. The cost of the books sold was $850.

June 30 Granted Reddy Bookstore $120 credit for books returned costing $72.

Powell's Book Warehouse's chart of accounts includes the following: No.101 Cash, No.112, Accounts Receivable, No.120 Inventory, No. 201 Accounts Payable, No. 401 Sales Revenue, No.412 Sales Returns and Allowances, No. 414 Sales Discounts, and No. 595 Cost of Goods Sold.

Instructions - Journalize the transactions for the month of June for Powell's Book Warehouse using a perpetual inventory system.