Question

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, n/60; the invoice is dated November 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, less the return on November 7. View transaction list Journal entry worksheet

Answer 1

SOLUTION : 1
Journal Entries
Sr. No.	Date	Account Title and explanation	Debit	Credit
1	Nov, 05	Merchandise inventory (1500 X $ 40)	$60,000
		Accont Payable		$60,000
		(Purchase Goods on terms 4/10, n 60)
2	Nov, 07	Account Payable (35 Units X $ 40)	$1,400
		Merchandise inventory		$1,400
		(Damaged goods returned to seller)
3	Nov, 15	Account Payable ($ 60,000- $ 1400)	$58,600
		Purhcase Discount ($ 58,600 X 4%)		$2,344
		Cash		$56,256
		(Net amount paid to supplier after deducting cash discount)
SOLUTION : 2
Journal Entries
Sr. No.	Date	Account Title and explanation	Debit	Credit
1	Aug, 01	Merchandise inventory	$1,08,000
		Accont Payable		$1,08,000
		(Purchase Goods on terms 3/10, n 30)
2	Nov, 15	Account Payable	$1,08,000
		Purhcase Discount		$3,240
		Cash		$1,04,760
		(Net amount paid to supplier after deducting cash discount)