Question

On May 12, Digital Distributors received three shipments of merchandise. The first was shipped F.O.B. shipping point, had a total invoice price of $142,500, and was delivered by a trucking company that charged an additional $8,300 for transportation charges from Digital. The second was shipped F.O.B. shipping point and had a total invoice price of $87,250, including transportation charges of $5.700 that were prepaid by the seller. The third shipment was shipped F.O.B. destination and had an invoice price of $21,650, exduding transportation charges of $1,125 paid by the seller. Digital uses a perpetual inventory system. Digital has not paid any of the invoices. Required: Prepare journal entries to record these purchases. Journalize the entries to record the first shipment and transportation charges, if required.

Answer 1

Answer:

Date	Account Title and Explanation	Debit	Credit
May 12	Inventory	142,500
	Accounts Payable		142,500
	(Purchase of Inventory on account)
May 12	Inventory	8,300
	Accounts Payable		8,300
	(Transportation charges)
May 12	Inventory	87,250
	Accounts Payable		87,250
	(Purchase of Inventory on account)
May 12	Inventory	21,650
	Accounts Payable		21,650
	(Purchase of Inventory on account)