Question

Prepare the journal entries to record the following transactions on McLeena Company's books using a perpetual inventory system. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.) 

(a) On March 2, Borst Company sold $800,000 of merchandise to McLeena Company on account, terms 2/10,n/30. The cost of the merchandise sold was $540,000. 

(b) On March 6, McLeena Company returned $140,000 of the merchandise purchased on March 2. The cost of the merchandise returned was $94,000. 

(c) On March 12, Borst Company received the balance due from McLeena Company.

Answer 1

Journal

Date	Account Title and Explanation	Debit	Credit
Mar 2	Inventory	800,000
	Accounts payable - Borst company		800,000
march 6	Accounts payable - Borst company	140,000
	Inventory		140,000
March 12	Accounts payable - Borst company	660,000
	Inventory		13,200
	Cash		646,800

Final amount due = Purchases - Purchase return

= 800,000 - 140,000

= $660,000

Discount = Final amount due x Discount rate

= 660,000 x 2%

= $13,200

Cash paid = Final amount due - Discount

= 660,000 - 13,200

= $646,800