Question

Brief Exercise 13-1 Martinez Corporation uses a periodic inventory system and the gross method of accounting for purchase discounts. (a) On July 1, (1) Martinez purchased $80,000 of inventory, terms 1/10, n/30, FOB shipping point. (2) Martinez paid freight costs of $1,207. (b) On July 3, Martinez returned damaged goods and received credit of $8,000. (c) On July 10, Martinez paid for the goods. Prepare all necessary journal entries for Martinez. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Martinez Corporation uses a periodic inventory system and the gross method of accounting for purchase discounts. (a) On July 1, (1) Martinez purchased $80,000 of inventory, terms 1/10, n/30, FOB shipping point. (2) Martinez paid freight costs of $1,207. (b) On July 3, Martinez returned damaged goods and received credit of $8,000. (c) On July 10, Martinez paid for the goods. Prepare all necessary journal entries for Martinez. (If no entry is required, select "No Entry" for the account titles and enter o for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) No. Date Account Titles and Explanation Debit Credit (a) (1) (a) (2)

Answer 1

Credit Debit 80,000 $ 80,000 S 1.207 $ 1.207 | No. Date Account Titles and Explanation (a) (1) July. 1 Purchases Accounts Payable (a) (2) Freight-In Cash (6) July 3 Accounts Payable Purchase returns and allowences (c) July. 10 Accounts Payable Cash Purchase Dicounts $ 8.000 S 8,000 S 72.000 $ S 71,280 720 Working Notes: Accounts Payable = $80,000-$8,000 = $72,000 Purchase Discounts = $72,000*1% = $720 Cash = $72.000*99% = $71,280