The following selected transactions were completed by Lorimer Company during Aug
ID: 2434879 • Letter: T
Question
The following selected transactions were completed by Lorimer Company during August of the current year. Lorimer Company uses the periodic system and a perpetual inventory systemAug 3. Purchased $24,500 of merchandise on account, FOB shipping point, terms 2/10 n/30.
4. Paid transportation costs of $475 on the August 3 purchase.
7. Returned $4,000 of the merchandise purchased on August 3.
11. Sold merchandise on account, 12,700 FOB destination, 2/15, n/30. The cost of merchandise sold was 7,600.
12. Paid transportation costs of 300 for the merchandise sold on August 11.
13. Paid for the purchase of August 3 less the return and discount
26. Received payment on account for the sale of August 11 less the discount.
Explanation / Answer
The following selected transactions were completed by Lorimer Company during August of the current year. Lorimer Company uses the periodic system and a perpetual inventory system Aug 3. Purchased $24,500 of merchandise on account, FOB shipping point, terms 2/10 n/30. Mercantile Inventory $24,500 Accounts Payable $24,500 4. Paid transportation costs of $475 on the August 3 purchase. Mercantile Inventory $475 Cash $475 7. Returned $4,000 of the merchandise purchased on August 3. Accounts Payable $4,000 Merchandise Inventory $4,000 11. Sold merchandise on account, 12,700 FOB destination, 2/15, n/30. The cost of merchandise sold was 7,600. Accounts receivable $12,700 Sales $12,700 Cost of goods sold $7,600 Merchandise Inventory $7,600 12. Paid transportation costs of 300 for the merchandise sold on August 11. Transportation expense $300 Cash $300 13. Paid for the purchase of August 3 less the return and discount Accounts Payable $20,500 Cash $20,090 Merchandise Inventory $410 26. Received payment on account for the sale of August 11 less the discount. Cash $12,446 Sales discount $254 Accounts receivable $12,700