Merchandising transactions: perpetual Inventory  system

p6. Teague Company engaged in the following transactions in October 2014:

Oct.      7     Sold merchandise on credit to Mel Forde, terms n/30, FOB shipping point,

$12,000 (cost, $7,200).

8        Purchased merchandise on credit from Surf Company, terms n/30, FOB shipping point, $24,000.

9        Paid Surf Company for shipping charges on merchandise purchased on October 8, $1,016.

10         Purchased merchandise on credit from Tata Company, terms n/30, FOB shipping point, $38,400, including $2,400 freight costs paid by Tata.

14      Sold merchandise on credit to David Johnson, terms n/30, FOB  shipping point,  $9,600  (cost,  $5,760).

14      Returned damaged merchandise received from Surf Company on October 8 for  credit, $2,400.

17      Received check from Mel Forde for her purchase of October 7.

19         Sold merchandise for cash, $7,200 (cost, $4,320).

20         Paid Tata Company for purchase of October 10.

21         Paid Surf Company the balance from the transactions of October 8 and October 14.

24      Accepted from David Johnson a return of merchandise, which was put back in inventory, $800 (cost,  $480).

 

reQUIreD

1.    Prepare journal entries to record the transactions, assuming use of the perpetual inventory system. (Hint: Refer to the TriLevel Problem feature.)

2.    ACCounting ConneCtion ▶ Receiving cash rebates from suppliers based on the past year’s purchases is a common practice in some industries. If, at the end of the year, Teague receives rebates in cash from a supplier, should these cash rebates be reported as revenue? Why or why not?