The following transactions were recorded by an inexperienced bookkeeper during the months of June and JillyBean Company. JillyBean 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 Cash. The terms of the purchase were 2/10, n/30, FOB shipping point.
11 The invoice for freight in the amount of $225 for the delivery of merchandise purchased from DanDan was paid and was debited to Delivery Expense
12 Damaged goods totalling $200 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 recorded as a debit to Purchases and a credit to Cash.
July 15 JillyBean sold goods for $9,275. Sales was credited and Cost of Goods Sold was debited for this amount. The cost of the inventory sold was $3,800. 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 JillyBean's manager gave the customer from July 15 a $300 allowance. The entry made to record the allowance was a debit to Sales and a credit to Sales Returns and Allowances
Instructions
(a) Review each transaction above and indicate whether you agree or disagree with how the book keeper accounted for the transaction.
(b) If you disagreed with any of the accounting, prepare the correct entry. E5-8 Presented below is information related