Question

On October 1, the Ivanhoe Bicycle Store had an inventory of 24 ten speed bicycles at a cost of $157 each. During the month of October, the following transactions occurred. Assume Ivanhoe uses a perpetual inventory system. Oct 4 Purchased 189 bicycles at a cost of $150 each from the Nixon Bicycle Company, terms 2/10, 1/30 5 Paid freight of $900 on the October 4 purchase. Sold 14 bicycles from the October 1 inventory to Team America for $250 each, terms 62/10, n/30 Received credit from the Nixon Bicycle Company for the return of 17 defective bicycles 13 Issued a credit memo to Team America for the return of a defective bicycle. 14 Paid Nixon Bicycle Company in full, less discount. Prepare the journal entries to record the transactions assuming the company uses a perpetual inventory system. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 2,520. Record journal entries in the order presented in the problem.) (Ctrl) FO

Answer 1

Journal entries :

Oct 4 Purchases a/c Dr $28,350   

To Nixon Bicycle Company $28,350

(Purchased 189 bicylces at $150 each)

Oct 5 Purchases a/c Dr $900

To Cash a/c $900

(Since frieght was paid on purchase of bicylces, the same has been debited to stock a/c)

Oct 6 Team America a/c Dr $3,500

To Sales a/c $3,500

(Sold 14 cycles @ $250each)

Oct 7 Nixon Bicycle Co. a/c Dr $2,550

To Purchase returns a/c   $2,550

(Returned 17 cycles @ 150 each)

Oct 13 Sales returns a/c Dr $250

To Team America $250

(1 cycles was returned by Team America)

Oct 14 Nixon Bicycle co. a/c Dr $25,800     

To Cash/bank $25,284

To Discount Received $516

(Paid for 172 cycles (189-12) @ 150 each and got a discount of 2% discount as the same was paid

within 10 days)

Working Note: 172*150 = $25,800 (Total Due)

(-) 2% = $ 516   (Discount)

$25,284 (Amount Paid)