Journal Entries:
Prepare the necessary general journal entries for the month of October for the Dolan Company for each situation given below. Dolan uses a perpetual inventory system.
Oct. 5 Paid cash of $12,000 for operating expenses that were incurred and properly recorded in the previous period.
Oct. 8 Purchased merchandise for $30,000 on account. Credit terms: 2/10, n/30; Freight terms: FOB shipping point.
Oct. 10 Paid freight bill of $470 for merchandise purchased on October 8.
Oct. 12 Borrowed $10,000 from Heritage Bank signing an 8%, 3-month note.
Oct. 15 Paid for merchandise purchased on October 8. The company takes all discounts to which it is entitled.
Oct. 20 Sold merchandise for $12,000 to Ed Gant on account. The cost of the merchandise sold was $8,000. Credit terms: 2/10, n/30.
Oct. 22 Purchased a 2-year insurance policy for $2,400 cash.
Oct. 25 Issued Credit Memo No. 151 to Ed Gant for $750 for merchandise returned by him from the sale on October 20. The cost of the merchandise returned was $500.
Oct. 29 Purchased office equipment for $20,000 paying $4,000 in cash and signing a 3-month, 9% note for the remainder.