Journal Entries for Merchandising Transactions
Shown Below Is a Partial

question 86

Essay

Journal entries for merchandising transactions
Shown below is a partial chart of accounts for Main Street Markets., followed by a series of merchandising transactions. The company uses a perpetual inventory system, records purchases at net cost, and records sales at the full invoice price. Sales taxes are collected on all sales, and the sales tax liability is recorded immediately. Freight charges on inbound shipments are recorded in the Transportation-in account. $$\begin{array} { | l | l | l | l | } \hline 1 & \text { Cash } & 50 & \text { Sales } \\\hline 2 & \text { Accounts Receivable } & 51 & \text { Sales Discounts } \\\hline 5 & \text { Inventory } & 52 & \text { Sales Returns \& Allowances } \\\hline 30 & \text { Accounts Payable } & 60 & \text { Cost of Goods Sold } \\\hline 35 & \text { Sales Taxes Payable } & 62 & \text { Transportation-in } \\\hline 39 & \text { Income Taxes Payable } & \text { XX } & \text { All other expense account } \\\hline\end{array}$$ Indicate the accounts that should be credited in recording each transaction by placing the appropriate account number(s) in the space provided.

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Definitions:

Annually Balancing

The process of adjusting or reconciling financial accounts or budgets to match or balance over a one-year period.

Cyclically Balanced Budget

A fiscal strategy where the government aims to balance its budget over the complete economic cycle, accumulating surpluses in boom periods and deficits during recessions.

Budget Deficits

A financial situation where a government's expenditures surpass its revenues.

Budget Surpluses

A situation where a government's revenue exceeds its expenditures over a specific period, indicating financial health.