PurchaseRelated Transactions Warwicks Co a womens clothing s

Purchase-Related Transactions Warwick\'s Co., a women\'s clothing store, purchased $25,000 of merchandise from a supplier on account, terms FOB destination, 1/10 n/30. Warwick\'s returned $4,300 of the merchandise, receiving a credit memo, and then paid the amount due within the discount period a. Journalize Warwick\'s Co.\'s entry to record the purchase. Merchandise Inventory Accounts Payable 25,000 25,000 b. Journalize Warwick\'s Co.\'s entry to record the merchandise return. Accounts Payable 4,300 Merchandise Inventory 4.300 c. Journalize warwick\'s Co.\'s entry to record the payment. Accounts Payable 20,700 20,493

Solution

Journal entry A and B are Correct but Journal entry 3 is partially correct.

Correct Journal entry at the time of payment for Merchandise inventory purchased.

Accounts payable                                                            $ 20700

                Cash                                                                                      $ 20493

                Discount Earned                                                               $ 207

(Discount of 1% earned on 20700)

Notes