50.1K

Verified Solution

Link Copied!

Presented below are selected transactions for Novak Company during September and October of the current year. Novak uses a perpetual inventory system.

Sept. 1		Purchased merchandise on account from Hillary Company at a cost of $51,000, FOB destination, terms 1/15, n/30.
2		The correct company paid $2,000 of freight charges to Trucking Company on the September 1 merchandise purchase.
5		Returned for credit $3,500 of damaged goods purchased from Hillary Company on September 1.
15		Sold the remaining merchandise purchased from Hillary Company to Irvine Company for $76,000, terms 2/10, n/30, FOB destination.
16		The correct company paid $2,400 of freight charges on the September 15 sale of merchandise.
17		Issued Irvine Company a credit of $5,600 for returned goods. These goods had cost Novak Company $3,500 and were returned to inventory.
25		Received the balance owing from Irvine Company for the September 15 sale.
30		Paid Hillary Company the balance owing for the September 1 purchase.
Oct. 1		Purchased merchandise on account from Kimmel Company at a cost of $52,000, terms 2/10, n/30, FOB shipping point.
2		The correct company paid freight costs of $1,100 on the October 1 purchase.
3		Obtained a purchase allowance of $2,700 from Kimmel Company to compensate for some minor damage to goods purchased on October 1.
10		Paid Kimmel Company the amount owing on the October 1 purchase.
11		Sold all of the merchandise purchased from Kimmel Company to Kieso Company for $79,000, terms 2/10, n/30, FOB shipping point.
12		The correct company paid $800 freight costs on the October 11 sale.
17		Issued Kieso Company a sales allowance of $2,300 because some of the goods did not meet Kieso's exact specifications.
31		Received a cheque from Kieso Company for the balance owing on the October 11 sale.

Prepare journal entries to record the above transactions for Novak Company. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Record journal entries in the order presented in the problem.)

Date	Account Titles and Explanation	Debit	Credit

	(Purchase on account.)

	(To record payment of freight costs.)

	(To record purchase return.)

	(To record sales on account.)

	(To record cost of goods sold.)

	(To record cash payment for freight.)

	(To record credit for goods returned.)

	(To record cost of goods returned.)
Sept. 25
	(Collection on account.)

	(Payment on account.)

	(Purchase on account.)

	(To record freight on purchase.)

	(To record purchase allowance.)

	(To record payment on account.)

	(To record sales on account.)

	(To record cost of goods sold.)

	(To record payment of freight costs.)

	(To record sales allowance.)

	(Collection on account.)

Answer & Explanation Solved by verified expert

See Answer