The following transactions were recorded by an inexperienced bookkeeper during the months of June and July for Sunland Company Sunland Company uses a perpetual inventory system. June 10 A purchase of $4,000 of merchandise from DanDan Distributors was debited to Purchases and credited to C ash, The terms of the purchase were 2/10,n/30,FOB shipping point. 11 The imvoice for freight in the amount of $175 for the delivery of merchandise purchased from DanDan was paid and was debited to Delivery Expense. 12 Damaged goods totalling $300 werdreturned to DanDan Distributors for credit. The bookkeeper recorded a debit to Accounts Receivable and a credit to Sales Returns and Allowances. 20 A payment was made to DanDan Distributors for the June 10 purchase, The payment was a debit to Purchases and a credit to Cash. July 15 Sunland sold goods for $9,145; Sales was credited and Cost of Goods Sold was debited for this amount. The cost of the inventory sold was $3,700. The terms of the sale were 1/15,n/30,FOB destination. 15. Freight charges on the above transaction were debited to Accounts Recelvable and credited to Cash for \$175. The bookkeeper believed the customer had to pay for the freight charges. 17 Sunland's manager gave the customer from July 15 a $220 allowance. The entry made to record the allowance was a debit to Sales and a credit to Sales Returns and Allowances. Review each transaction below and indicate whether you agree or disagree with how the bookkeeper accounted for the transaction. June 10 A purchase of $4,000 of merchandise from DanDan Distributors was debited to Purchases and credited to Cash. The terms of the purchase were 2/10,n/30, FOB shipping point. 11 The invoice for freight in the amount of $175 for the delivery of merchandise purchased from DanDan was paid and was debited to Delivery Expense. 12 Damaged goods totalling $300 were returned to DanDan Distributors for credit. The bookkeeper recorded a debit to Atcounts Receivable and a credit to Sales Returns and Allowances. 20 A payment was made to DanDan Distributors for the June 10 purchase. The payment was a debit to Purchases and a credit to Cash. July 15 Sunland sold goods for $9,145; Sales was credited and Cost of Goods Sold was debited for this amount. The cost of the inventory sold was $3,700. The terms of the sale were 1/15,N/30,FOB destination. 15. Freight charges on the above transaction were debited to Accounts Receivable and credited to Cash for $175. The bookkeeper believed the customer had to pay for the freight charges. 17 Sunland's manager gave the customer from July 15 a $220 allowance. The entry made to record the allowance was a debit to Sales and a credit to Sales Returns and Allowances
