Problem 5: Boston Dollar Store uses the gross method to record purchase discount

Question

Problem 5: Boston Dollar Store uses the gross method to record purchase discounts and uses a perpetual inventory system. Boston engaged in the following transactions during April: Purchased $15,000 in merchandise subject to terms of 2/10, n/30. The goods were shipped f.o.b. shipping point Received a billing from Orange Freight Lines for $300 for the 4/12 purchase. Returned $1,000 of merchandise from the 4/12 purchase. Paid balances due from 4/12 purchase. 4/12 4/13 4/15 4/20 Required: Prepare journal entries to record the above transactions

Explanation / Answer

Journal entries Date Accounts titles and explanations Debit $ Credit $ 12-Apr Merchandise Inventory Dr. 15000      Accounts receivable 15000 13-Apr Merchandise Inventory Dr. 300      Cash Account 300 15-Apr Accounts payable Dr. 1000      Merchandise Inventory 1000 20-Apr Accounts payable Dr. 14000       Merchandise Inventory (14000*2%) 280       Cash Account (14000*98%) 13720

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---