Question

on june 10, m4 engineering purchased $20,000 of inventory, fob destination, credit terms 2/10, n/30. on june 15, m4 engineering returned $2,000 of the inventory. journalize the two entries

Answer 1

The first entry records the purchase of inventory on credit, and the second entry accounts for the return of inventory.

Step-by-step explanation:

The first entry to journalize is the purchase of inventory. Since it's FOB destination, it means the seller is responsible for the inventory until it reaches M4 Engineering. Therefore, M4 Engineering should record the purchase when it receives the inventory. The journal entry would be:

Date: June 10

Inventory $20,000

Accounts Payable $20,000

To record the purchase of inventory on credit.

The second entry to journalize is the return of $2,000 inventory on June 15. The journal entry would be:

Date: June 15

Accounts Payable $2,000

Inventory $2,000

To record the return of inventory.