Question

Exercise 8.4 Recording purchases with purchases discounts. LO 8-1

Record the following transactions of J. Min Designs in a general journal:

DATE			TRANSACTIONS
2019
April	1		Purchased merchandise on credit from O’Rourke Fabricators, Invoice 885, $2,100, terms 3/10, n/30; freight of $63 prepaid by O’Rourke Fabricators and added to the invoice (total invoice amount, $2,163).
	9		Paid amount due to O’Rourke Fabricators for the purchase of April 1, less the 3 percent discount, Check 457.
	15		Purchased merchandise on credit from Kroll Company, Invoice 145, $1,300, terms 3/10, n/30; freight of $80 prepaid by Kroll and added to the invoice.
	17		Returned damaged merchandise purchased on April 15 from Kroll Company; received Credit Memorandum 332 for $100.
	24		Paid the amount due to Kroll Company for the purchase of April 15, less the return on April 17, taking the 3 percent discount, Check 470.

Answer 1

Journal Entries
Sr. No.	Date	Account Title and explanation	Debit	Credit
1	April 01, 2019	Purchase	$2,163
		Accont Payable - O'Rourke Fabricators		$2,163
2	April 09, 2019	Accont Payable - O'Rourke Fabricators	$2,163
		Cash		$2,100
		Purchse Discount($2,100 X 3%)		$63
3	April 15, 2019	Purchase	$1,300
		Accont Payable - Kroll Co.		$1,300
4	April 17, 2019	Accont Payable - Kroll Co.	$100
		Purchase Return		$100
5	April 24, 2019	Accont Payable - Kroll Co.	$1,200
		Cash		$1,166.40
		Purchse Discount($1,120 X 3%)		$33.60
		Working Note : 1
		Purchase Discount as on April 24:
		Purchase invoice value =	$1,300.00
		Less: Freight	$80.00
		Less: Return	$100.00
		Net Payable	$1,120.00
		Discount @ 3% of $ 1,120	$33.60
		Net Payable against invoice = $ 1300 - $ 100 - $ 33.60=	$1,166.40