Purchased merchandise from Lyon Company under the following

Purchased merchandise from Lyon Company under the following terms: $5,900 price, invoice dated April 2, credit terms of 2/15, n/60, and FOB shipping point. Paid $330 for shipping charges on the April 2 purchase. Returned to Lyon Company unacceptable merchandise that had an invoice price of $800 Sent a check to Lyon Company for the April 2 purchase, net of the discount and the returned merchandise Apr. 2 3 4 17 18 Purchased merchandise from Frist Corp. under the following terms: $12,250 21 28 price, invoice dated April 18, credit terms of 2/10, n/30, and FOB destination. After negotiations, received from Frist a $3,430 allowance on the April 18 purchase Sent check to Frist paying for the April 18 purchase, net of the discount and allowance 2 Prepare journal entries to record the above transactions for a retail store. Assume a perpetual inventory system.

Solution

Journal Entries Date Accounts title and explanation Debit $ Credit $ 2-Apr Inventory Account Dr. 5900     Accounts payable -Lyon 5900 3-Apr Inventory Account Ddr. 330    Cash account 330 4-Apr Accounts payable-Lyon Dr. 800      Inventory Account 800 17-Apr Accounts payable-Lyon Dr. 5100      Inventory Account (5100*2%) 102      Cash account 4998 18-Apr Inventory Account Dr. 12250     Accounts payable-Frist 12250 21-Apr Accounts payable-Frist 3430     Inventory Account 3430 28-Apr Accounts payable-Frist Dr. 8820     Cash account 8643.6     Inventory (12250-3430)*2% 176.4