| Monarch Garden Center retails garden supplies. Monarch uses the perpetual inventory method to account for sales and purchases. Record the transactions needed to journalize the following for October of the current year: | |
| Oct. 2 |
Purchased inventory on credit terms of 1/10 net eom, FOB shipping point, for $3,000. Freight charges on the purchase were $150. (go to the entry) |
| Oct. 9 |
Sold garden supplies on credit terms 3/20 net 30, FOB shipping point, for $8,000. The cost of the supplies sold was $4,500. (go to the entry) |
| Oct. 10 |
Paid the amount owed on account for the Oct. 2 inventory purchase. (go to the entry) |
| Oct. 15 |
Received merchandise that was returned as defective, originally sold for $500 on Oct. 9. The original cost of the supplies returned was $275. (go to the entry) |
| Oct. 20 |
Received payment on account for the Oct. 9 sale less the appropriate sales discount. (go to the entry) |
| Date | Account Titles and Explanations | Debit | Credit |
| Oct. 2 | Merchandise Inventory | $3,150 | |
| (back) | Accounts Payable | 3,150 | |
| Oct. 9 | Accounts Receivable | $8,000 | |
| (back) | Sales | 8,000 | |
| Oct. 9 | Cost of Merchandise Sold | $4,500 | |
| Merchandise Inventory | 4,500 | ||
| Oct. 10 | Accounts Payable | $3,150 | |
| (back) | Merchandise Inventory | 30 | |
| Cash | 3,120 | ||
| Oct. 15 | Sales Returns Allowance | $500 | |
| (back) | Accounts Receivable | 500 | |
| Oct. 15 | Cost of Merchandise Sold | $275 | |
| Merchandise Inventory | 275 | ||
| Oct. 20 | Cash | $7,275 | |
| (back) | Sales Discount | 225 | |
| Accounts Receivable | 7,500 | ||
