Problem 1

Record the journal entries for the following transactions that occurred during the month of December for Magic Merchandisers, I. nc using a perpetual inventory system.

Dec. 1^st: Purchased merchandise on account from Starlight Inc., list price $24,000, terms FOB destination 2/10, n/30.

Dec. 3^rd: Purchased merchandise on account from Oriental Industries $18,500 terms 1/10, n/30, FOB shipping point. $1,800 in freight cost was added to the invoice.

Dec. 5^th: Returned $4,000 of merchandise to Starlight Inc.

Dec. 11^th: Paid Starlight Inc. for Dec. 1^st purchase less return of Dec. 5^th and discount.

Dec. 12^th: Sold merchandise inventory on account to Magic R Us for $16,500 terms 2/10, n/30, FOB destination. The cost of merchandise sold was $6,800.

Dec. 13^th: Paid Oriental Industries for Dec. 3^rd purchase, less discount.

Dec. 15^th: Sold merchandise inventory for $7,400 to Houdini. Houdini used a credit card to purchase the inventory. The cost of merchandise sold was $3,200.

Dec. 17^th: Houdini returned $3,300 of inventory. Cost of the merchandise returned equaled $1,850.

Dec. 21^st: Received cash on account from Dec. 12^th sale to Magic R Us, less discount.

Dec. 24^th: Sold merchandise inventory on account to Magik, list price $6,600 terms FOB destination 2/10, n/30. The cost of merchandise sold was $3,350.

Dec. 29^th: Paid credit card fees to National Processing Center $440.