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The following transactions were recorded by an inexperienced bookkeeper during the months of June and July for Blossom Company. Blossom Company uses a perpetual inventory
The following transactions were recorded by an inexperienced bookkeeper during the months of June and July for Blossom Company. Blossom Company uses a perpetual inventory system. June 10 A purchase of $3,700 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 $215 for the delivery of merchandise purchased from DanDan was paid and was debited to Delivery Expense. 12 Damaged goods totalling $400 were returned 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 Blossom sold goods for $9,205; Sales was credited and Cost of Goods Sold was debited for this amount. The cost of the inventory sold was $3,300. 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 \$135. The bookkeeper believed the customer had to pay for the freight charges. 17 Blossom's manager gave the customer from July 15 a \$200 allowance. The entry made to record the allowance was a debit to Sales and a credit to Sales Returns and Allowances. a) Review each transaction below and indicate whether you agree or disagree with how the bookkeeper accounted for the transaction. June 10 A purchase of $3,700 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 $215 for the delivery of merchandise purchased from DanDan was paid and was debited to Delivery Expense. 12 Damaged goods totalling $400 were returned 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 Blossom sold goods for $9,205; Sales was credited and Cost of Goods Sold was debited for this amount. The cost of the inventory sold was $3,300. 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 $135. The bookkeeper believed the customer had to pay for the freight charges
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