QS 45 Recording purchases returns and discounts taken LO P1

QS 4-5 Recording purchases, returns, and discounts taken LO P1 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 750 units of product at a cost of $12 per unit. Terms of the sale are 4/10, n/60; the invoice is dated November 5. and received full credit. return on November 7. Nov. 7 Returned 50 defective units from the November 5 purchase Nov. 15 Paid the amount due from the November 5 purchase, less the View transaction list Journal entry worksheet

Solution

Answer

Date

General Journal

Debit

Credit

Working

05-Nov

Inventory

$        9,000.00

[750 units x $12]

Accounts Payable

$        9,000.00

[750 units x $12]

(merchandise purchased on account)

07-Nov

Accounts Payable

$            600.00

[50 units x $12]

Inventory

$            600.00

[50 units x $12]

(merchandise returned)

15-Nov

Accounts Payable

$        8,400.00

[$9000 - $ 600]

Inventory

$            336.00

[$ 8400 x 4%]

Cash

$        8,064.00

[$ 8400 x 96%] or [$8400 - $ 336]

(payment made and cash discount received)

Date	General Journal	Debit	Credit	Working
05-Nov	Inventory	$        9,000.00		[750 units x $12]
	Accounts Payable		$        9,000.00	[750 units x $12]
	(merchandise purchased on account)
07-Nov	Accounts Payable	$            600.00		[50 units x $12]
	Inventory		$            600.00	[50 units x $12]
	(merchandise returned)
15-Nov	Accounts Payable	$        8,400.00		[$9000 - $ 600]
	Inventory		$            336.00	[$ 8400 x 4%]
	Cash		$        8,064.00	[$ 8400 x 96%] or [$8400 - $ 336]
	(payment made and cash discount received)