The following selected transactions were completed by Betz Company during July of the current year. Betz Company uses the net method under a perpetual inventory system.

July	1	Purchased merchandise from Sabol Imports Co., $13,322, terms FOB destination, n/30.
	3	Purchased merchandise from Saxon Co., $10,650, terms FOB shipping point, 2/10, n/eom. Prepaid freight of $240 was added to the invoice.
	5	Purchased merchandise from Schnee Co., $13,700, terms FOB destination, 2/10, n/30.
	6	Issued debit memo to Schnee Co. for merchandise with an invoice amount of $4,850 returned from purchase on July 5.
	13	Paid Saxon Co. for invoice of July 3.
	14	Paid Schnee Co. for invoice of July 5, less debit memo of July 6.
	19	Purchased merchandise from Southmont Co., $29,840, terms FOB shipping point, n/eom.
	19	Paid freight of $410 on July 19 purchase from Southmont Co.
	20	Purchased merchandise from Stevens Co., $22,200, terms FOB destination, 1/10, n/30.
	30	Paid Stevens Co. for invoice of July 20.
	31	Paid Sabol Imports Co. for invoice of July 1.
	31	Paid Southmont Co. for invoice of July 19.

Journalize the entries to record the transactions of Betz Company for July. Refer to the Chart of Accounts for exact wording of account titles.

Chart of Accounts

CHART OF ACCOUNTS

Betz Company

General Ledger

	ASSETS
110	Cash
120	Accounts Receivable
125	Notes Receivable
130	Inventory
131	Estimated Returns Inventory
140	Office Supplies
141	Store Supplies
142	Prepaid Insurance
180	Land
192	Store Equipment
193	Accumulated Depreciation-Store Equipment
194	Office Equipment
195	Accumulated Depreciation-Office Equipment

	LIABILITIES
211	Accounts Payable-Sabol Imports Co.
212	Accounts Payable-Saxon Co.
213	Accounts Payable-Schnee Co.
214	Accounts Payable-Southmont Co.
215	Accounts Payable-Stevens Co.
216	Salaries Payable
218	Sales Tax Payable
219	Customer Refunds Payable
221	Notes Payable

	EQUITY
310	Common Stock
311	Retained Earnings
312	Dividends

	REVENUE
410	Sales
610	Interest Revenue

	EXPENSES
510	Cost of Goods Sold
521	Delivery Expense
522	Advertising Expense
524	Depreciation Expense-Store Equipment
525	Depreciation Expense-Office Equipment
526	Salaries Expense
531	Rent Expense
533	Insurance Expense
534	Store Supplies Expense
535	Office Supplies Expense
536	Credit Card Expense
539	Miscellaneous Expense
710	Interest Expense

Journal

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Journalize the entries to record the transactions of Betz Company for July. Refer to the Chart of Accounts for exact wording of account titles.

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PAGE 10

JOURNAL

ACCOUNTING EQUATION

Score: 257/301

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
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Points:

51.23 / 60

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Journalize these transactions from the buyer's perspective. Discounts are taken on the amount owed to the seller, except for any freight costs.

July 1, 3, 5, 19 & 20: Using the perpetual inventory system, purchases of inventory on account are recorded by debiting the merchandise inventory account and crediting the accounts payable account. Under FOB shipping point, freight is paid by the buyer, while FOB destination freight is the seller's expense. Often freight must be prepaid for the carrier to deliver.

July 6: Any discounts or returns are recorded directly by the buyer who debits Accounts Payable and credits Merchandise Inventory, basically reversing what was done in recording the purchase.

July 13: Since the invoice is paid within the discount period, the cash paid on account is the difference between the invoice and the discount.

July 14: Returns are not eligible for discounts. Since the invoice is paid within the discount period, Accounts Payable is debited for the balance in the account. The cash paid on account is the difference between the invoice and the discount, less the returns.

July 19: Freight expense increases the cost of the merchandise. However, freight is typically prepaid in cash.

July 30: Since the invoice is paid within the discount period, the cash paid on account is the difference between the invoice and the discount.

July 31: Since no discounts are allowed, no discounts are recorded. The cash paid on account in each case is equal to the invoice.