Question

Prepare the journal entries to record the following transactions on Ivanhoe Company's books using a perpetual inventory system. (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. Record journal entries in the order presented in the problem.) (a) On March 2, Metlock Company sold $882,900 of merchandise to Ivanhoe Company on account, terms 3/10, n/30. The cost of the merchandise sold was $527,900. (b) On March 6, Ivanhoe Company returned $107,600 of the merchandise purchased on March 2. The cost of the merchandise returned was $66,800. (c) On March 12, Metlock Company received the balance due from Ivanhoe Company. No. Date Account Titles and Explanation Debit Credit (a) Cost of Goods Sold Cost of Goods Sold Inventory

Answer 1

Journal

Mar. 2	Inventory	882,900
	Accounts payable - Metlock company		882,900
Mar. 6	Accounts payable - Metlock company	107,600
	Inventory		107,600
Mar. 12	Accounts payable - Metlock company	775,300
	Cash		752,041
	Inventory		23,259

Final amount due = Cost of goods purchased - Cost of goods returned

= 882,900 - 107,600

= $775,300

Discount amount = Final amount due x Discount percentage

= 775,300 x 3/100

= $23,259

Cash payment to be made = Final amount due - Discount amount

= 775,300 - 23,259

= $752,041