Sales and purchase-related transactions using perpetual inventory system The following were selected from among the transactions completed by Essex Company during July of the current year. Essex uses the net method under a perpetual inventory system. July 3. Purchased merchandise on account from Hamling Co., list price $77,000, trade discount 25%, terms FOB shipping point, 2/10, n/30, with prepaid freight of $920 added to the invoice. 5. Purchased merchandise on account from Kester Co., $44,400, terms FOB destination, 2/10, n/30. 6. Sold merchandise on account to Parsley Co., $15,810, terms n/15. The cost of the goods sold was $9,370. 7. Returned merchandise with an invoice amount of $12,750 purchased on July 5 from Kester Co. 13. Paid Hamling Co. on account for purchase of July 3. 15. Paid Kester Co. on account for purchase of July 5, less return of July 7. 21. Received cash on account from sale of July 6 to Parsley Co. 21. Sold merchandise on MasterCard, $248,000. The cost of the goods sold was $130,940. 22. Sold merchandise on account to Tabor Co., $53,800, terms 2/10, n/30. The cost of the goods sold was $35,600. 23. Sold merchandise for cash, $37,930. The cost of the goods sold was $20,540. 28. Paid Parsley Co. a cash refund of $6,420 for returned merchandise from sale of July 6. The cost of the returned merchandise was $2,990. 31. Paid MasterCard service fee of $3,850. Required: Journalize the transactions.

Essex Company

Journal Entries:

July 3. Debit Inventory $57,515

Credit Accounts payable (Hamling Co.) $57,515

To record the purchase of inventory at list price of $77,000, trade discount 25%, terms FOB shipping point, 2/10, n/30, with prepaid freight of $920 added to the invoice.

July 5. Debit Inventory $43,512

Credit Accounts payable (Kester Co.)

To record the purchase of goods on account at list price of $44,400, terms FOB destination, 2/10, n/30.

July 6. Debit Accounts receivable (Parsley Co.) $15,810

Credit Sales revenue $15,810

To record the sale of goods on credit terms n/15.

Debit Cost of goods sold $9,370

Credit Inventory $9,370

To record the cost of goods sold.

July 7. Debit Accounts payable (Kester Co.) $12,495

Credit Inventory $12,495

To record the return of goods with invoice amount of $12,750 purchased on July 5 from Kester Co.

July 13. Debit Accounts payable (Hamling Co.) $57,515

Credit Cash $57,515

To record the payment on account

July 15. Debit Accounts payable (Kester Co.) $31,017

Credit Cash $31,017

To record the payment on account.

July 21. Debit Cash $15,810

Credit Accounts receivable (Parsley Co.) $15,810

To record the receipt of payment on account.

July 21. Debit Cash (MasterCard) $248,000

Credit Sales revenue $248,000

To record the sale of goods on account.

Debit Cost of goods sold $130,940

Credit Inventory $130,940

To record the cost of goods sold.

July 22. Debit Accounts receivable (Tabor Co.) $52,724

Credit Sales revenue $52,724

To record the sale of goods on account with invoice of $53,800 terms 2/10, n/30.

Debit Cost of goods sold $35,600

Credit Inventory $35,600

To record the cost of goods sold.

July 23. Debit Cash $37,930

Credit Sales revenue $37,930

To record the sale of goods for cash.

Debit Cost of goods sold $20,540

Credit Inventory $20,540

To record the cost of goods sold.

July 28. Debit Sales returns $6,420

Credit Cash (Parsley Co.) $6,420

To record the refund for returned goods.

Debit Inventory $2,990

Credit Cost of goods sold $2,990

To record the cost of goods returned.

July 31. Debit Service fee (MasterCard) $3,850

Credit Cash $3,850

To record the service fee paid to MasterCard.

Explanation:

a) Data and Analysis:

July 3. Inventory $57,515 Accounts payable (Hamling Co.) $57,515 list price $77,000, trade discount 25%, terms FOB shipping point, 2/10, n/30, with prepaid freight of $920 added to the invoice.

July 5. Inventory $43,512 Accounts payable (Kester Co.)

$44,400, terms FOB destination, 2/10, n/30.

July 6. Accounts receivable (Parsley Co.) $15,810 Sales revenue $15,810

terms n/15.

Cost of goods sold $9,370 Inventory $9,370

July 7. Accounts payable (Kester Co.) $12,495 Inventory $12,495

invoice amount of $12,750 purchased on July 5 from Kester Co.

July 13. Accounts payable (Hamling Co.) $57,515 Cash $57,515

July 15. Accounts payable (Kester Co.) $31,017 Cash $31,017

July 21. Cash $15,810 Accounts receivable (Parsley Co.) $15,810

July 21. Cash (MasterCard) $248,000 Sales revenue $248,000

Cost of goods sold $130,940 Inventory $130,940

July 22. Accounts receivable (Tabor Co.) $52,724 Sales revenue $52,724 $53,800 terms 2/10, n/30.

Cost of goods sold $35,600 Inventory $35,600

July 23. Cash $37,930 Sales revenue $37,930

Cost of goods sold $20,540 Inventory $20,540

July 28. Sales returns $6,420 Cash $6,420

Inventory $2,990 Cost of goods sold $2,990

July 31. Service fee (MasterCard) $3,850 Cash $3,850

a.

fractionally backed paper money

fiat money

paper money

metallic money