Question

Some of the transactions of Syracuse Company during May are listed below. Syracuse uses the periodic inventory method.

May 10 - Purchased merchandise on account, $12,000, terms 2/10, n/30.

May 13 - Returned part of the purchase of August 10, $1,200, and received credit on account.

May 15 - Purchased merchandise on account, $16,000, terms 1/10, n/60.

May 25 - Purchased merchandise on account, $20,000, terms 2/10, n/30.

May 28 - Paid invoice of August 15 in full.

Assuming that purchases are recorded at net amounts and that discounts lost are treated as financial expenses:

1. Prepare general journal entries to enter the transactions.

2. Prepare the adjusting entry necessary on August 31 if financial statements are to be prepared at that time.

Answer 1

Solution 1:

Journal Entries - Syracuse Company
S.No	Particulars	Debit	Credit
10-May	Purchases Dr ($12000*98%)	$11,760.00
	To Accounts Payable		$11,760.00
	(To record Purchase at net amount)
13-May	Accounts Payable Dr ($1200*98%)	$1,176.00
	To Purchase return and allowances		$1,176.00
	(To record Purchase returns)
15-May	Purchases Dr ($16000*99%)	$15,840.00
	To Accounts Payable		$15,840.00
	(To record Purchase at net amount)
25-May	Purchases Dr ($20000*98%)	$19,600.00
	To Accounts Payable		$19,600.00
	(To record Purchase at net amount)
28-May	Accounts Payable Dr	$15,840.00
	Purchase Discount Lost Dr ($16000*1%)	$160.00
	To Cash (28500*97%)		$16,000.00
	(To record Cash Payment after discount period))

Solution 2:

Adjusting Journal Entry
S.No	Particulars	Debit	Credit
31-May	Purchase Discount Lost Dr ($12000 - $1200)*2%)	$216.00
	To Accounts Payable		$216.00
	(To record adjusting entry for discount lost on May 10 purchases)