Question

E.9

E8S Using perpetual inventory procedures, journalize the following 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 EX6 Refer to E8.5. Make the journal entries assuming Jession uses the gross price method. E87Refer to E8.5. Make the journal entries assuming Jessica uses a periodic inventory system and the net price method. E88 Refer to E8.5 and E8.6. Make the journal entries assuming Jessica uses a periodic system and the gross price method EXY Refer to E8.5. Assuming Jessien uses perpetual procedures and the net price method, determine the effect of each of the events on the accounting equation.

Answer 1

E8.9) As requested, E8.9 is answered.

Perpetual Inventory Method - Net Price Method:

Date	Account Titles and Explanations	Debit	Credit
Apri. 4	Merchandise Inventory ($20,500 - [$20,500*2/100])	$20,090
	Accounts Payable - Parker Company		$20,090
	(To record the purchase of merchandise inventory on account)
Apri. 8	Accounts Payable - Parker Company ($1,200 - [$1,200*2/100])	$1,176
	Merchandise Inventory		$1,176
	(To record the return of merchandise inventory purchased on account)
Apri. 12	Accounts Payable - Parker Company ($20,090 - $1,176)	$18,914
	Discount Received ($20,500*2/100 - $1,200*2/100)		$386
	Cash ($19,300 - $386)		$18,528
	(To record the payment for the credit purchase along with receipt of discount)

Effect on Accounting equation-

Accounting Equation	:	Total Assets	=	Total Liabilities	+	Total Equity
Apri. 4	:	+ Inventory $20,090	=	+ Accounts Payable $20,090	+	-
Apri. 8	:	- Inventory $1,176	=	- Accounts Payable $1,176	+	-
Apri. 12	:	- Cash $18,528	=	- Accounts Payable $18,914	+	+ Discount Received $386

April -4: Due to this purchase, the merchandise inventory will increase on the assets side of the accounting equation and also the accounts payable which is a liability will also increase with same amount on the liabilities side of the accounting equation.

Apri. 8: Due to return of the merchandise, the inventory account on the assets side will decrease and the accounts payable will also decrease on the liabilities side.

Apri. 12: Due to payment, the cash account will decrease with the amount paid on the assets side of the balance sheet, the accounts payable which is a liability will also decrease due to payment of liabilities. The discount received is an income so i will be added to net income under total equity.