Prepare journal entries to record each of the following purchases transactions o
ID: 2500770 • Letter: P
Question
Prepare journal entries to record each of the following purchases transactions of a merchandising company.(Purchasing Transactions) show supporting calculations and assume a perpetual inventory system. Purchased 50 units of a product at a cost of dollar 4per unit. Terms of the sale are 2/10,n/30 and FOB shipping point. The invoice is dated jun 1 Paid dollar 175 cash for freight charges for fedex for the jun 1 purchase. Returned 20 defective units from the jun 1 purchase and received full credit. Paid the amount due from the jun 1 purchase, less the return on jun 7. Paid amount due from the jun 1 purchase without receiving the cash discount.Explanation / Answer
Journal entries:
Date Accounts and explanations Debit ($) Credit ($) June. 1 Purchases (50 units * $4 per unit) 200 Accounts payable 200 (To record the purchase of merchandise inventory) June. 1 Freight-in 175 Cash 175 (To record the paymentof freight charges by cash) June. 7 Accounts payable 80 Purchase return and allowances(20 units * $4 per unit) 80 (To record the return ofdefective units that were purchased) June. 11 Accounts payable($200 - $80) 120 Purchase Discount($120*2/100) 2.4 Cash ($120 - $2.4) 117.6 (To record the payment of amount due within 10 days to get the discount at 2%) June. 31 Accounts payable ($200 - $80) 120 Cash 120 (To record the payment of amount due without receipt of discount)