Prepare the necessary journal entries on the books of Magic Carpet Company to re

Question

Prepare the necessary journal entries on the books of Magic Carpet Company to record the following transactions, assuming a perpetual inventory system:

(Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Transactions

Account Titles and Explanation

Debit

Credit

(a)

(b)

(c)

(a) Magic purchased $49,000 of merchandise on account, terms 2/10, n/30. (b) Returned $4,000 of damaged merchandise for credit. (c) Paid for the merchandise purchased within 10 days.

Explanation / Answer

Journal entries :

Transaction Account Title and explanation Debit credit a) Merchandise inventory a/c 49000 Account payable a/c 49000 (To record merchandise inventory purchased) b) Account payable a/c 4000 Merchandise inventory a/c 4000 (To record merchandise inventory returned) c) Account payable a/c 45000 Cash a/c (45000*98%) 44100 Merchandise inventory a/c (45000*2%) 900 (To record amount paid)

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