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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.

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Related questions

Aug. 5 Sold merchandise to Laird Corp. for $5,740 under credit terms of 2/10, n/60, FOB destination, invoice dated August 5. The merchandise had cost $4,098.

Aug. 10 Laird returned merchandise from the August 5 sale that had cost Sheng $683 and been sold for $957. The merchandise was restored to inventory.

Aug 15. received the balance due from Laird corp. for the august 5 sale less the return on August 10.

Journalize the following transactions.

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?

My professor wants us to journal these.

Jan 2. Sold merchandise on account, $8000, terms FOB shippingpoint, n/eom. The
cost was $6000.
Jan 8. Sold merchandise on account $ 20,000, terms FOB destination,1/10, n/30. The
cost was 14,000
16- sold merch on acc 12,000 terms FOB shipping point, 1/10, n/30.cost was 7,200
18- received check for amount due for sale on Jan 8
19 issued credit memo and for 3000 for merch returned from sale jan16. the cost of
merch returned, 1,800
26-received check for amount due for sale on jan 16 less creditmemo of jan 19 and discount
31- paid gallatin delivery service 1,500 for merch delivered duringJan to customers under
shipping terms of FOB destination
31 received check for amount due for sale on jan 2.

BUYER POV

Silvergate Co.

May 3. purchased merch for, 16,000m terms FOB destination, 2/10,n/30.
6- issed debit memo for 4000 of merch returned from purchase on may3
10 purchased merch, 25000 terms FOB shipping point, n/eom
10-paid freight of 600 on many 10 purchase
13- paid for invoice of may 3 less debit memo of may 6 anddiscount
31 paid for invoice of may 10

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