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The following were selected from among the transactions completed by Babcock Company during November of the current year: Nov. 3. Purchased merchandise on account from

The following were selected from among the transactions completed by Babcock Company during November of the current year:

Nov. 3. Purchased merchandise on account from Moonlight Co., list price $86,000, trade discount 20%, terms FOB destination, 2/10, n/30.
4. Sold merchandise for cash, $40,040. The cost of the goods sold was $22,180.
5. Purchased merchandise on account from Papoose Creek Co., $48,150, terms FOB shipping point, 2/10, n/30, with prepaid freight of $830 added to the invoice.
6. Returned $13,600 ($17,000 list price less trade discount of 20%) of merchandise purchased on November 3 from Moonlight Co.
8. Sold merchandise on account to Quinn Co., $14,380 with terms n/15. The cost of the merchandise sold was $8,680.
13. Paid Moonlight Co. on account for purchase of November 3, less return of November 6.
14. Sold merchandise on VISA, $219,630. The cost of the goods sold was $152,680.
15. Paid Papoose Creek Co. on account for purchase of November 5.
23. Received cash on account from sale of November 8 to Quinn Co.
24. Sold merchandise on account to Rabel Co., $51,300, terms 1/10, n/30. The cost of the goods sold was $33,840.
28. Paid VISA service fee of $3,520.
30. Paid Quinn Co. a cash refund of $5,700 for returned merchandise from sale of November 8. The cost of the returned merchandise was $3,390.

Required:

Journalize the transactions.

Nov. 3 Merchandise Inventory
Accounts Payable-Moonlight Co.
Nov. 4-sale
Nov. 4-cost
Nov. 5
Nov. 6
Nov. 8
Nov. 8
Nov. 13
Nov. 14-sale
Nov. 14-cost
Nov. 15
Nov. 23
Nov. 24-sale
Nov. 24-cost
Nov. 28
Nov. 30-refund
Nov. 30-cost

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Journalize these transactions from the buyer's point of view. Using the perpetual inventory system, purchases of inventory on account are recorded by increasing both the merchandise inventory account and the accounts payable account. Recall that FOB shipping point freight is the buyer's cost, while FOB destination freight is the seller's expense. Often freight must be prepaid for the carrier to deliver.

Nov. 3: Calculate any trade discount before the purchase or sale amount is recorded.

Nov. 5: Using the perpetual inventory system, purchases of inventory on account are recorded by debiting the merchandise inventory account and crediting the accounts payable account. Freight expense added to the invoice increases the cost of the merchandise.

Nov. 6: A return of merchandise that had a trade discount is recorded without the trade discount. Using the perpetual inventory system, 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.

Nov. 13 and 15: Returns are not eligible for discounts. Since the invoice is paid within the discount period, the cash paid on account is the difference between the invoice and the discount.

Journalize these transactions from the seller's point of view. Keep in mind that the sales discounts are given on the outstanding balance of the sale transaction, except for any freight costs.

Nov. 4: Two entries are required for (1) the cash sale and (2) the cost of the merchandise sold and inventory decrease on the seller's records.

Nov. 14: Remember that credit card transactions are recorded as cash sales. Two entries are required: (1) the sale for cash and (2) the cost of the merchandise sold and inventory decrease on the seller's records.

Nov. 23: Since no discount is allowed, no discount is recorded. The cash paid is equal to the receivable on the seller's books.

Nov. 24: Two entries are required for: (1) the sale on account and (2) the cost of the merchandise sold and inventory decrease on the seller's records.

Nov. 28: Record the service fee as an expense.

Nov. 30: Customer Refunds Payable is debited while the credit is to Cash. A second entry increases Merchandise Inventory and credits Estimated Returns Inventory for the return cost.

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