Question

Exercise 5-1 

This information relates to Crane Co..

 1. On April 5, purchased merchandise from Sheridan Company for $26,000, terms 3/10, n/30.

 2. On April 6, paid freight costs of $520 on merchandise purchased from Sheridan Company.

 3. On April 7, purchased equipment on account for $31,400.

 4. On April 8, returned $4,100 of April 5 merchandise to Sheridan Company.

 5. On April 15, paid the amount due to Sheridan Company in full.

 (a) Prepare the journal entries to record the transactions listed above on Crane Co.'s books. Crane Co. uses a perpetual inventory system. 

 (b) Assume that Crane Co. paid the balance due to Sheridan Company on May 4 instead of April 15. Prepare the journal entry to record this payment.

Answer 1

		Debit	Credit
April 5	Inventory	26000
	Accounts payable		26000
April 6	Inventory	520
	Cash		520
April 7	Equipment	31400
	Accounts payable		31400
April 8	Accounts Payable	4100
	Inventory		4100
April 15	Accounts Payable	21900
	Inventory		657	=21900*3%
	Cash		21243
b
May 4	Accounts Payable	21900
	Cash		21900