Question

how do you do E8.6?

(E8.5 Using perpetual inventory procedures, journalize the following transactions for Jessica s Gift Shop for April. Assume Jessica uses the net price method of recording merchandise purchases. April 4 April 8 Jessica purchased $20,500 of merchandise from Parker Company; terms 2/10, n/30. Jessica returned $1,200 of damaged merchandise purchased on April 4 to Parker Company and Parker Company will decrease Jessica's bill accordingly. Jessica paid Parker Company for the purchase and took advantage of the cash discount. April 12 E8.6 Refer to E8.5. Make the journal entries assuming Jessica uses the gross price method.

Answer 1

Net Method:

Date	Account title and explanation	Debit	Credit
April 4	Inventory [20,500 x 0.98]	$20,090
	Accounts payable		$20,090
	[To record purchase of inventory]
April 8	Accounts payable	$1,176
	Inventory [1,200 x 0.98]		$1,176
	[To record purchase returns]
April 12	Accounts payable [20,090-1,176]	$18,914
	Cash		$18,914
	[To record paid for accounts payable]

Gross Method:

Date	Account title and explanation	Debit	Credit
April 4	Inventory	$20,500
	Accounts payable		$20,500
	[To record purchase of inventory]
April 8	Accounts payable	$1,200
	Inventory		$1,200
	[To record purchase returns]
April 12	Accounts payable [20,500-,1200]	$19,300
	Inventory [19,300 x 2%]		$386
	Cash		$18,914
	[To record paid for accounts payable]