Question

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Exercise 5-04 a-b (Video) On June 10, Tuzun Company purchased $8,000 of merchandise on account from Epps Company, FOB shipping point, terms 2/10, n/30. Tuzun pays the freight costs of $400 on June 11. Damaged goods totaling $300 are returned to Epps for credit on June 12 The fair value of these goods is $70. On June 19, Tuzun pays Epps Company in full, less the purchase discount. Both companies use a perpetual inventory system. Prepare separate entries for each transaction on the books of Tuzun Company. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry for the account titles and enter for the amounts. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit

Answer 1

1) Journal entry

Date	account and explanation	Debit	Credit
June 10	Merchandise inventory	8000
	Account payable		8000
June 11	Merchandise inventory	400
	Cash		400
June 12	Account payable	300
	Merchandise inventory		300
June 19	Account payable	7700
	Cash (7700*98%)		7546
	Merchandise inventory		154

2) journal entry

Date	account and explanation	Debit	Credit
June 10	Account receivable	8000
	Sales revenue		8000
	(To record sales)
June 10	cost of goods sold	4800
	Merchandise inventory		4800
	(To record cost of goods sold)
June 12	Sales return and allowance	300
	Account receivable		300
	(To record merchandise returned)
June 12	Merchandise inventory	70
	Cost of goods sold		70
	(To record cost of merchandise returned)
June 19	Cash	7546
	Sales discount	154
	Account receivable		7700