
Concept explainers
Concept Introduction:
Journal Entries:
A
To prepare:
Journal entries for Yarvelle Company for merchandising transactions.

Answer to Problem 1BPSB
Solution:
The journal entries for Yarvelle Company for merchandising transactions are −
Date | Accounts Descriptions | Debit | Credit |
May-02 | Merchandise Inventory | 10,000 | |
Accounts Payable - Havel | 10,000 | ||
(To record purchase of merchandise inventory) | |||
May-04 | Accounts Receivables - Heather | 11,000 | |
Sales | 11,000 | ||
(To record sales of inventory) | |||
May-04 | Cost of Goods sold | 5,600 | |
Merchandise Inventory | 5,600 | ||
(To record cost of goods sold for the sales on May 4) | |||
May-05 | Merchandise Inventory | 250 | |
Cash | 250 | ||
(To record payment of freight on merchandise inventory) | |||
May-09 | Cash | 2,500 | |
Sales | 2,500 | ||
(To record cash sales of inventory) | |||
May-10 | Merchandise Inventory | 3,650 | |
Accounts Payable - Duke | 3,650 | ||
(To record purchase of merchandise inventory) | |||
May-12 | Accounts Payable - Duke | 400 | |
Merchandise Inventory | 400 | ||
(To record purchase return to Duke) | |||
May-14 | Cash | 10,780 | |
Sales Discounts | 220 | ||
Accounts Receivables - Heather | 11,000 | ||
(To record collection of cash within discount period) | |||
May-17 | Accounts Payable - Havel | 10,000 | |
Merchandise Inventory | 100 | ||
Cash | 9,900 | ||
(To record payment of accounts payable within discount period) | |||
May-20 | Accounts Receivable - Tameron | 2,800 | |
Sales | 2,800 | ||
(To record sales of inventory) | |||
May-20 | Cost of goods sold | 1,450 | |
Merchandise Inventory | 1,450 | ||
(To record cost of goods sold for the sales on May 20) | |||
May-22 | Merchandise Inventory | 400 | |
Accounts Receivable - Tameron | 400 | ||
(To record issue of credit memo to Tameron) | |||
May-25 | Accounts Payable - Duke | 3250 | |
Merchandise Inventory | 65 | ||
Cash | 3185 | ||
May-30 | Cash | 2,352 | |
Sales Discounts | 48 | ||
Accounts Receivable - Tameron | 2400 | ||
(To record cash receipt from Tameron within discount period) | |||
May-31 | Accounts Receivables - Heather Co. | 7,200 | |
Sales | 7,200 | ||
(To record sales of inventory) | |||
Cost of Goods sold | 3,600 | ||
Merchandise Inventory | 3,600 | ||
(To record cost of goods sold for the sales on May 31) |
Explanation of Solution
The above journal entries can be explained as −
May 2: The merchandise is purchased from Havel Co. So merchandise is debited and Accounts payable − Havel co. is credited.
May 4: The merchandised inventory is sold to Heather Co. so sales are recorded with a credit and since, the goods are sold on account, so Accounts receivable − Heather Co. is debited.
May 4: The cost of goods sold for sales on May 4 has been recorded. Thus, the merchandise inventory is credited as it is getting reduce and costs of goods sold is debited as it is an expense.
May 5: The freight expense of $ 250 is paid on the purchases of May 2, thus added to the merchandise costs. So, merchandise is increased with a debit and cash is credited.
May 9: The goods are sold on cash basis, thus cash is debited and sales revenue is credited.
May 10: The merchandise is purchased from Duke Co. So merchandise is debited and Accounts payable − Duke Co. is credited
May 12: The purchase returns are recorded in this entry. Thus, the Accounts payable − Duke Co. is debited and merchandise inventory is credited.
May 14: The balance due from Heather Co. is received after deducting the sales discounts. The sales discounts are calculated as−
The given information is −
- Credit sales = $ 11,000
- Terms of credit sales = 2/10, n/60
- Discount rate = 2 % (if it is paid within a period of 10 days)
Thus, the sales discount will be = $ 220
The amount of cash will be calculated as −
Thus, the cash to be received = $ 10,780.
May 17:The balance after deducting the discounts is paid to Havel Co. for the merchandise purchased on May 2. The discount received will be recorded under merchandise inventory. The discount will be calculated as −
The given information is −
- Credit purchases = $ 10,000
- Terms of credit sales = 1/10, n/30
- Discount rate = 1 % (if it is paid within a period of 10 days)
Thus, the sales discount will be = $ 100
The amount of cash will be calculated as −
Thus, the cash to be paid = $ 9,900.
May 20: The merchandised inventory is sold to Tameron Co. so sales are recorded with a credit and since, the goods are sold on account, so Accounts receivable − Tameron Co. is debited.
May 20: The cost of goods sold for sales on May 20 has been recorded. Thus, the merchandise inventory is credited as it is getting reduce and costs of goods sold is debited as it is an expense.
May 22: The sales returns are recorded in this entry, thus, merchandise inventory is debited and Accounts receivable − Tameron Co. is credited.
May 25: The balance after deducting the discounts is paid to Duke Co. for the merchandise purchased on May 10. The credit memo received from Duke will also be deducted from the balance.
The discount received will be recorded under merchandise inventory. The discount will be calculated as −
The given information is −
- Credit purchases balance = $ 3,250
- Terms of credit sales = 2/15, n/360
- Discount rate = 2 % (if it is paid within a period of 15 days)
Thus, the discount will be = $ 65
The amount of cash will be calculated as −
Thus, the cash to be paid = $ 3,185.
May 30: The balance due from TameronCo. is received after deducting the sales discounts.
The balance will be calculated as −
The sales discounts are calculated as −
The given information is −
- Credit sales balance = $ 2,400
- Terms of credit sales = 2/15, n/60
- Discount rate = 2 % (if it is paid within a period of 15 days)
Thus, the sales discount will be = $ 480
The amount of cash will be calculated as −
Thus, the cash to be received = $ 2,352.
May 31:The merchandised inventory is sold to Heather Co. so sales are recorded with a credit and since, the goods are sold on account, so Accounts receivable − Heather Co. is debited.
May 31: The cost of goods sold for sales on May 31 has been recorded. Thus, the merchandise inventory is credited as it is getting reduce and costs of goods sold is debited as it is an expense.
Thus, the journal entries for Yarvelle Company have been prepared.
Want to see more full solutions like this?
Chapter 5 Solutions
Fundamental Accounting Principles -Hardcover
- Financial accounting problemarrow_forwardA company carries an average annual inventory of $4.3 million if it estimates the cost of capital is 13% so much costs are 9% and risk calls are 8%. What does it cost per year to carry this inventory?arrow_forwardWhich accounting principle requires that expenses be matched with revenues in the period in which they are incurred to produce those revenues? A) Going Concern Principle B) Matching Principle C) Consistency Principle D) Conservatism Principlearrow_forward
- Need helparrow_forwardA delivery van cost $64,300 when purchased and has a $58,700 balance in the accumulated depreciation account. If the van is discarded, Tread line Logistics will record: (1) Loss on disposal, $5,600 (2) Gain on disposal, $2,000 (3) No gain or loss because it was discarded (4) Loss of $58,700arrow_forwardCould you help me solve this financial accounting question using appropriate calculation techniques?arrow_forward
- Accurate Value Hardware began in 2019 with a credit balance of $47,000 in the allowance for sales returns account. Sales and cash collections from customers during the year were $663,000 and $615,000, respectively. Accurate Value estimates that 7.2% of all sales will be returned. In 2019, customers returned merchandise for a credit of $36,000 to their accounts. Accurate Value's 2019 income statement would report net sales of__.arrow_forwardAccurate answerarrow_forwardAccountingarrow_forward
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education





