The following selected transactions were completed during August between Summit Company and Beartooth Co. Both companies use the net method under a perpetual inventory system.Aug.1Summit Company sold merchandise on account to Beartooth Co., $48,000, terms FOB destination, 2/15, n/eom. The cost of the goods sold was $28,800. 2Summit Company paid freight of $1,150 for delivery of merchandise sold to Beartooth Co. on August 1. 5Summit Company sold merchandise on account to Beartooth Co., $66,000, terms FOB shipping point, n/eom. The cost of the goods sold was $40,000. 9Beartooth Co. paid freight of $2,300 on August 5 purchase from Summit Company. 15Summit Company sold merchandise on account to Beartooth Co., $58,700, terms FOB shipping point, n/45. Summit paid freight of $1,675, which was added to the invoice. The cost of the goods sold was $35,000. 16Beartooth Co. paid Summit Company for purchase of August 1. 20Summit Company paid Beartooth Co. a cash refund of $1,000 for defective merchandise purchased on August 1. Beartooth Co. kept the merchandise. 31Beartooth Co. paid Summit Company on account for purchase of August 5. 31Summit Company issued Beartooth Co. a credit memo for merchandise with an invoice amount of $4,000 that was returned from the August 15 sale. The cost of the merchandise returned was $2,500. Journalize the August transactions for (1) Summit Company and (2) Beartooth Co. Refer to the Chart of Accounts of the appropriate company for exact wording of account titles. CHART OF ACCOUNTSSummit CompanyGeneral Ledger ASSETS110Cash121Accounts Receivable-Beartooth Co.125Notes Receivable130Inventory131Estimated Returns Inventory140Office Supplies141Store Supplies142Prepaid Insurance180Land192Store Equipment193Accumulated Depreciation-Store Equipment194Office Equipment195Accumulated Depreciation-Office Equipment LIABILITIES210Accounts Payable216Salaries Payable218Sales Tax Payable219Customer Refunds Payable221Notes Payable EQUITY310Common Stock311Retained Earnings312Dividends REVENUE410Sales610Interest Revenue EXPENSES510Cost of Goods Sold521Delivery Expense522Advertising Expense524Depreciation Expense-Store Equipment525Depreciation Expense-Office Equipment526Salaries Expense531Rent Expense533Insurance Expense534Store Supplies Expense535Office Supplies Expense536Credit Card Expense539Miscellaneous Expense710Interest Expense CHART OF ACCOUNTSBeartooth Co.General Ledger ASSETS110Cash120Accounts Receivable125Notes Receivable130Inventory131Estimated Returns Inventory140Office Supplies141Store Supplies142Prepaid Insurance180Land192Store Equipment193Accumulated Depreciation-Store Equipment194Office Equipment195Accumulated Depreciation-Office Equipment LIABILITIES211Accounts Payable-Summit Company216Salaries Payable218Sales Tax Payable219Customer Refunds Payable221Notes Payable EQUITY310Common Stock311Retained Earnings312Dividends REVENUE410Sales610Interest Revenue EXPENSES510Cost of Goods Sold521Delivery Expense522Advertising Expense524Depreciation Expense-Store Equipment525Depreciation Expense-Office Equipment526Salaries Expense531Rent Expense533Insurance Expense534Store Supplies Expense535Office Supplies Expense536Credit Card Expense539Miscellaneous Expense710Interest ExpenseThere are 26 journal entries for Summit Company and 16 journal entries for Beartooth Co.

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Description: The following selected transactions were completed during August between Summit Company and Beartooth Co. Both companies use the net method under a perpetual inventory system.Aug.1Summit Company sold merchandise on account to Beartooth Co., $48,000,

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The following selected transactions were completed during August between Summit Company and Beartooth Co. Both companies use the net method under a perpetual inventory system.

Aug.	1	Summit Company sold merchandise on account to Beartooth Co., $48,000, terms FOB destination, 2/15, n/eom. The cost of the goods sold was $28,800.
	2	Summit Company paid freight of $1,150 for delivery of merchandise sold to Beartooth Co. on August 1.
	5	Summit Company sold merchandise on account to Beartooth Co., $66,000, terms FOB shipping point, n/eom. The cost of the goods sold was $40,000.
	9	Beartooth Co. paid freight of $2,300 on August 5 purchase from Summit Company.
	15	Summit Company sold merchandise on account to Beartooth Co., $58,700, terms FOB shipping point, n/45. Summit paid freight of $1,675, which was added to the invoice. The cost of the goods sold was $35,000.
	16	Beartooth Co. paid Summit Company for purchase of August 1.
	20	Summit Company paid Beartooth Co. a cash refund of $1,000 for defective merchandise purchased on August 1. Beartooth Co. kept the merchandise.
	31	Beartooth Co. paid Summit Company on account for purchase of August 5.
	31	Summit Company issued Beartooth Co. a credit memo for merchandise with an invoice amount of $4,000 that was returned from the August 15 sale. The cost of the merchandise returned was $2,500.

Journalize the August transactions for (1) Summit Company and (2) Beartooth Co. Refer to the Chart of Accounts of the appropriate company for exact wording of account titles.

CHART OF ACCOUNTS

Summit Company

General Ledger

	ASSETS
110	Cash
121	Accounts Receivable-Beartooth Co.
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
210	Accounts Payable
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

CHART OF ACCOUNTS

Beartooth Co.

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-Summit Company
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

There are 26 journal entries for Summit Company and 16 journal entries for Beartooth Co.

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