Exercise 5-04

The following transactions are for Teal Mountain Company.

1.On December 3, Teal Mountain Company sold $453,100 of merchandise to Sandhill Co., on account, terms1/10, n/30. The cost of the merchandise sold was $317,100.2.On December 8, Sandhill Co. was granted an allowance of $22,800 for merchandise purchased on December 3.3.On December 13, Teal Mountain Company received the balance due from Sandhill Co.

(a)

Prepare the journal entries to record these transactions on the books of Teal Mountain. Teal Mountain uses a perpetual inventory system.(If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

No.

Date

Account Titles and Explanation

Debit

Credit

1.

Choose a transaction date for number 1

Dec. 3

Dec. 8

Dec. 13

Jan. 2

Enter an account title for journal entry 1 to record credit sale

enter a debit amount

enter a credit amount

Enter an account title for journal entry 1 to record credit sale

enter a debit amount

enter a credit amount

(To record sale of merchandise on account)Choose a transaction date for number 1

Dec. 3

Dec. 8

Dec. 13

Jan. 2

Enter an account title for journal entry 2 to record cost of merchandise sold

enter a debit amount

enter a credit amount

Enter an account title for journal entry 2 to record cost of merchandise sold

enter a debit amount

enter a credit amount

(To record cost of merchandise sold on account)2.

Choose a transaction date for number 2

Dec. 3

Dec. 8

Dec. 13

Jan. 2

Enter an account title for the third journal entry

enter a debit amount

enter a credit amount

Enter an account title for the third journal entry

enter a debit amount

enter a credit amount

3.

Choose a transaction date for number 2

Dec. 3

Dec. 8

Dec. 13

Jan. 2

Enter an account title for the journal entry on December 13

enter a debit amount

enter a credit amount

Enter an account title for the journal entry on December 13

enter a debit amount

enter a credit amount

Enter an account title for the journal entry on December 13

enter a debit amount

enter a credit amount

(b)

Assume that Teal Mountain Company received the balance due from Sandhill 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.(If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date

Account Titles and Explanation

Debit

Credit

Jan. 2

enter an account title

enter a debit amount

enter a credit amount

enter an account title

enter a debit amount

enter a credit amount