Prepare journal entries to record each of the following transactions of a merchandising company. The company uses a perpetual inventory system and the gross method.
Nov. 5 Purchased 1,500 units of product at a cost of $40 per unit. Terms of the sale are 4/10, 1/60; the invoice is dated November 5.
Nov. 7 Returned 35 defective units from the November 5 purchase and received full credit.
Nov. 15 Paid the amount due from the November 5 purchase, minus the return on November 7.
Purchased 1,500 units of product at a cost of $40 per unit. Terms of the sale are 4/10, 1/60; the invoice is dated November 5.
Returned 35 defective units from the November 5 purchase and received full credit.
Paid the amount due from the November 5 purchase, minus the return on November 7.
Answer:
Journal entry | |||
Date | Accounts titles and Explanation | Debit ($) | Credit ($) |
Nov-05 | Merchandise inventory(1500*40) | 60,000 | |
Account payable | 60,000 | ||
Nov-07 | Account payable(35*40) | 1,400 | |
Merchandise inventory | 1,400 | ||
Nov-15 | Account payable (60000-1400) | 58,600 | |
Cash (58600*96%) | 56,256 | ||
Discount Received / Merchandise inventory (58,600*4%) | 2,344 |
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