Question

The following selected transactions were completed by Betz Company during July of the current year. Betz Company uses the net method under a perpetual inventory system.

July	1	Purchased merchandise from Sabol Imports Co., $20,500, terms FOB destination, n/30.
	3	Purchased merchandise from Saxon Co., $12,000, terms FOB shipping point, 2/10, n/eom. Prepaid freight of $75 was added to the invoice.
	5	Purchased merchandise from Schnee Co., $8,000, terms FOB destination, 2/10, n/30.
	6	Issued debit memo to Schnee Co. for merchandise with an invoice amount of $1,500 returned from purchase on July 5.
	13	Paid Saxon Co. for invoice of July 3.
	14	Paid Schnee Co. for invoice of July 5, less debit memo of July 6.
	19	Purchased merchandise from Southmont Co., $18,900, terms FOB shipping point, n/eom.
	19	Paid freight of $140 on July 19 purchase from Southmont Co.
	20	Purchased merchandise from Stevens Co., $33,000, terms FOB destination, 1/10, n/30.
	30	Paid Stevens Co. for invoice of July 20.
	31	Paid Sabol Imports Co. for invoice of July 1.
	31	Paid Southmont Co. for invoice of July 19.

Answer 1

	Date	Description	Debit	Credit	ASSET	LIABILITIES	EQUITY
1	Jul. 1	Inventory	$ 20,500.00		Increase
2		Accounts Payable-Sabol Imports Co.		$ 20,500.00		Increase
3	3	Inventory (12000+75)	$ 12,075.00		Increase
4		Accounts Payable-Saxon Co.		$ 12,075.00		Increase
5	5	Inventory	$    8,000.00		Increase
6		Accounts Payable-Schnee Co.		$    8,000.00		Increase
7	6	Accounts Payable-Schnee Co.	$    1,500.00		Decrease
8		Inventory		$    1,500.00		Decrease
9	13	Accounts Payable-Saxon Co. ((12000-(12000*2%)+75))	$ 11,835.00		Decrease
10		Cash		$ 11,835.00		Decrease
11	14	Accounts Payable-Schnee Co.	$    6,370.00		Decrease
12		Cash		$    6,370.00		Decrease
13	19	Inventory	$ 18,900.00		Increase
14		Accounts Payable-Southmont Co.		$ 18,900.00		Increase
15	19	Inventory	$        140.00		Increase
16		Cash		$        140.00	Decrease
17	20	Inventory	$ 33,000.00		Increase
18		Accounts Payable-Stevens Co.		$ 33,000.00		Increase
19	30	Accounts Payable-Stevens Co.	$ 32,670.00		Decrease
20		Cash		$ 32,670.00		Decrease
21	31	Accounts Payable-Sabol Imports Co.	$ 20,500.00		Decrease
22		Cash		$ 20,500.00		Decrease
23	31	Accounts Payable-Southmont Co.	$ 18,900.00		Decrease
24		Cash		$ 18,900.00		Decrease

Note:

1) Purchases from Saxon Co is a FOB shipping contract. In FOB shipping contract freight should be borne by the buyer. Here seller already prepaid for freight, $75 should be paid to the seller

2) While making payment to Saxon co, discount is only on purchase price discount should apply only to 12000 and freight charges should be paid in full.