At the beginning of July, CD City has a balance in inventory of $2,950. The following transactions occur during the month of July. July 3 Purchase CDs on account from Wholesale Music for $1,850, terms 2/10, n/30. July 4 Pay cash for freight charges related to the July 3 purchase from Wholesale Music, $110. July 9 Return incorrectly ordered CDs to Wholesale Music and receive credit, $200. July 11 Pay Wholesale Music in full. July 12 Sell CDs to customers on account, $4,900, that had a cost of $2,550. July 15 Receive full payment from customers related to the sale on July 12. July 18 Purchase CDs on account from Music Supply for $2,650, terms 2/10, n/30. July 22 Sell CDs to customers for cash, $3,750, that had a cost of $2,050. July 28 Return CDs to Music Supply and receive credit of $210. July 30 Pay Music Supply in full. Assuming that CD City uses a perpetual inventory system, record the transactions.

Answer and Explanation:

The Journal entries is shown below:-

1. Merchandise Inventory Dr, $1,850

           To Accounts payable $1,850

(Being inventory is recorded)

2. Merchandise Inventory Dr, $110

         To Cash $110

(Being cash paid is recorded)

3. Accounts payable Dr, $200

        To Merchandise Inventory $200

(Being return inventory is recorded)

4. Accounts Payable Dr, $1,650 ($1,850 - $200)

Inventory Dr, $33 ($1,650 × 2%)

       To Cash $1,617

(Being cash paid is recorded)

5. Accounts receivable Dr, $4,900

             To Sales revenue $4,900

(Being sales revenue is recorded)

6. Cost of goods sold Dr, $2,550

        To Merchandise Inventory $2,550

(Being cost of goods sold is recorded)

7. Cash Dr, $4,900

      To Accounts receivable $4,900

(Being cash receipt is recorded)

8. Inventory Dr, $2,650

       To Accounts payable $2,650

(Being inventory is recorded)

9. Cash Dr, $3,750

     To Sales revenue $3,750

(Being cash receipt is recorded)

10. Cost of goods sold Dr, $2,050

       To Merchandise Inventory $2,050

(Being cost of goods sold is recorded)

11. Accounts payable Dr, $210

      To Merchandise Inventory $210

(Being inventory is recorded)

12. Accounts payable Dr, $2,440 ($2,650 - $210)

        To Cash $2,440

(Being cash is recorded)

a ab

c

explanation:

c because the item on a bank statement is also referred to as an account statement. in addition, it provides the beginning balance, ending balance, statement date, transaction date for each transaction, payee, customer name and address, statement period, the account holder's account number, and the bank's customer service number