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Vargo Company engaged in the following transactions in August2011:

Aug. 7 Sold merchandise on credit to Ken Smith, terms n/30, FOBshipping point, $3,000 (cost, $1,800). . 8 Purchased merchandise oncredit from Novak Company, terms n/30, FOB shipping point,$6,000.

9 Paid Smart Company for shipping charges on merchandise pur-chased on August 8, $254.

10 Purchased merchandise on credit from Mara’s Company, termsn/30, FOB shipping point, $9,600, including $600 freight costs paidby Sewall.

14 Sold merchandise on credit to Rose Milito, terms n/30, FOBshipping point, $2,400 (cost, $1,440). . 14 Returned damagedmerchandise received from Novak Company on August 8 for credit,$600.

17 Received check from Ken Smith for his purchase of August7.

19 Sold merchandise for cash, $1,800 (cost, $1,080).

20 Paid Mara’s Company for purchase of August 10.

21 Paid Novak Company the balance from the transactions ofAugust 8 and August 14.

24 Accepted from Rose Milito a return of merchandise, which wasput back in inventory, $200 (cost, $120).

Required

1. Prepare entries in journal form (refer to the Review Problem)to record the transactions, assuming use of the perpetual inventorysystem.

2. Receiving cash rebates from suppliers based on the pastyear’s purchases is a common practice in some industries. If at theend of the year Vargo Com- pany receives rebates in cash from asupplier, should these cash rebates be reported as revenue? Why orwhy not?

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Elin Hessel
Elin HesselLv2
28 Sep 2019

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Journalize the following transactions related to merchandising operations that occurred in August while paying attention to the credit terms:

Aug 1 - Purchased merchandise on account from ABC $1,500, FOB shipping point, terms n/30. The party paying the freight paid it in cash.
Aug 3 - Received credit of $200 from ABC for merchandise with flaws that you decided to keep.
Aug 5 - Sold merchandise on account to customers $500, terms 1/10,n/30. Cost of the items sold $250.
Aug 9 - Paid ABC.
Aug 25 - Granted credit of $200 to customers for merchandise returned with cost $100.
Aug 26 - Received payments on account from customers $200.

The Jewel Box purchases jewellery from around the world and sells to local retailers in Canada. Consider the following perpetual system merchandising transactions of The Jewel Box. Use a separate account for each receivable and payable; for example, record the purchase on August 1 in Accounts Payable—Luu Company. Aug. 1 Purchased necklaces from Luu Company for $4,700 under credit terms of 3/10, n/30, FOB destination. 4 At Luu Company’s request, paid $420 for freight charges on the August 1 purchase, reducing the amount owed to Luu. 5 Sold rings to Green Ruby for $4,220 under credit terms of 2/10, n/60, FOB destination. The merchandise had cost $2,820. 8 Purchased bracelets from Jane Co. for $5,900 under credit terms of 1/10, n/45, FOB shipping point. 9 Paid $395 shipping charges related to the August 5 sale to Green Ruby. 10 Green Ruby returned the rings purchased from the August 5 sale that had cost $510 and been sold for $870. The merchandise was restored to inventory. 12 After negotiations with Jane Co. concerning problems with the merchandise purchased on August 8, received a credit memo from Jane granting a price reduction of $300. 15 Received balance due from Green Ruby for the August 5 sale. 17 Purchased office equipment from WestCo on credit, $6,700, n/45. 18 Paid the amount due Jane Co. for the August 8 purchase. 19 Sold earrings to Chic Jewellery for $2,150 under credit terms of 1/10, n/30, FOB shipping point. The merchandise had cost $1,060. 22 Chic Jewellery requested a price reduction on the August 19 sale because the merchandise did not meet specifications. Sent Chic Jewellery a credit memo for $250 to resolve the issue. 29 Received Chic Jewellery’s payment of the amount due from the August 19 purchase. 30 Paid Luu Company the amount due from the August 1 purchase. Prepare General Journal entries to record the above transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Journalize the following transactions for the buyer, PriceCompany, using the gross method to account for purchase discounts.Assume a perpetual inventory system.

August 2 Purchased merchandise from Brown Company on account,$7,000, terms 2/10, n/30. The goods are shipped FOB shipping point,freight prepaid by seller, $50.
August 8 Returned to Brown Company merchandise previously purchasedon account, $500

August 12 Paid the amount due to Brown Company

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