Question

Consider the following transactions for Green Drug Store: (Click the icon to view the transactions Requirements 1. Journalize the purchase transactions. Explanations are not required. 2. In the final analysis, how much did the inventory cost Green? Requirement 1. Journalize the purchase transactions. Explanations are not required. (Assume the company uses a perpetual in explanations from journal entries.) Apr. 2: Green buys $22,500 worth of inventory on account with credit terms of 1/15, n/30, FOB shipping point Date Accounts Debit Credit Apr. 2 Inventory 22,500 Accounts Payable ma Apr. 4: Green pays a $120 freight charge Date NH Credit Apr. 4 HH8 21 ET INI Apr. 7: Green returns $6,500 of the merchandise due to damage during shipment. Enter any number in the edit fields and then continue to the next question. Save for Later

Answer 1

Requirement 1:

Date	Account title and Explanation	Debit	Credit
Apr.2	Inventory	$22,500
	Accounts payable		$22,500
	[To record purchase of inventory on account]
Apr.4	Inventory	$120
	Cash		$120
	[To record payment of freight]
Apr.7	Accounts payable	$6,500
	Inventory		$6,500
	[To record purchase returns]
Apr.14	Accounts receivable [22,500-6,500]	$16,000
	Inventory [16,000 x 1%]		$160
	Cash		$15,840
	[To record cash paid for accounts payable]

Requirement 2:

Purchases	$22,500
Freight	$120
Purchase returns	($6,500)
Purchase discount	($160)
Inventory cost	$15,960