Question

how do you do E8.7?

(E8.5 Using perpetual inventory procedures, journalize the following transactions for Jessica's Gift Shop for April. Assume Jessica uses the net price method of recording merchandise purchases April 4 Jessica purchased $20,500 of merchandise from Parker Company; terms 2710, n/30. April 8 Jessica returned $1,200 of damaged merchandise purchased on April 4 to Parker Company and Parker Company will decrease Jessica's bill accordingly. April 12 Jessica paid Parker Company for the purchase and took advantage of the cash discount. E8.6 Refer to E8.5. Make the journal entries assuming Jessica uses the gross price method. E8.7 Refer to E8.5. Make the journal entries assuming Jessica uses a periodic inventory system and the net price method.

Answer 1

E8.7) is answered as requested.

Periodic Inventory System: (Net Price Method)

Date	Account Titles and Explanations	Debit	Credit
Apri. 4	Purchases ($20,500 - [$20,500*2/100])	$20,090
	Accounts Payable - Parker Company		$20,090
	(To record the purchase of merchandise inventory on account)
Apri. 8	Accounts Payable - Parker Company ($1,200 - [$1,200*2/100])	$1,176
	Purchase returns		$1,176
	(To record the return of merchandise inventory purchased on account)
Apri. 12	Accounts Payable - Parker Company ($20,090 - $1,176)	$18,914
	Purchase Discount ($20,500*2/100 - $1,200*2/100)		$386
	Cash ($19,300 - $386)		$18,528
	(To record the payment for the credit purchase along with receipt of discount)