Question

Apr. 2 Purchased $3,100 of merchandise from Lyon Company with credit terms of 2/15, n/60, invoice dated April 2, and FOB shipping point.

3 Paid $390 cash for shipping charges on the April 2 purchase.
4 Returned to Lyon Company unacceptable merchandise that had an invoice price of $750.
17 Sent a check to Lyon Company for the April 2 purchase, net of the discount and the returned merchandise.
18 Purchased $5,500 of merchandise from Frist Corp. with credit terms of 1/10, n/30, invoice dated April 18, and FOB destination.
21 After negotiations, received from Frist a $500 allowance toward the $5,500 owed on the April 18 purchase.
28 Sent check to Frist paying for the April 18 purchase, net of the allowance and the discount.

Required:
Prepare journal entries to record the above transactions for a retail store. Assume a perpetual inventory system.

Answer 1

1. Apr 02

Dr Merchandise inventory $3,100

Cr Accounts payable-Lyon $3,100

2 Apr 03

Dr Merchandise inventory $390

Cr Cash $390

3 Apr 04

Dr Account payable-Lyon $750

Cr Merchandise inventory $750

4 Apr 17

Dr Account payable-Lyon $2,350

Cr Cash $2,303

Cr Merchandise inventory $47

5 Apr 18

Dr Merchandise inventory $5,500

Cr Account payable-Frist Corp $5,500

6 Apr 21

Dr Account payable-Frist Corp $500

Cr Merchandise inventory $500

7 Apr 28

Dr Account payable-Frist Corp $ 5000

Cr Cash $4,950

Cr Merchandise inventory $50

Step-by-step explanation:

Preparation of the journal entries to record the above transactions for a retail store. Assume a perpetual inventory system.

1. Apr 02

Dr Merchandise inventory $3,100

Cr Accounts payable-Lyon $3,100

2 Apr 03

Dr Merchandise inventory $390

Cr Cash $390

3 Apr 04

Dr Account payable-Lyon $750

Cr Merchandise inventory $750

4 Apr 17

Dr Account payable-Lyon ($3100-$750) $2,350

Cr Cash ($2350*98%) $2,303

Cr Merchandise inventory $47

($2,350-$2,303)

5 Apr 18

Dr Merchandise inventory $5,500

Cr Account payable-Frist Corp $5,500

6 Apr 21

Dr Account payable-Frist Corp $500

Cr Merchandise inventory $500

7 Apr 28

Dr Account payable-Frist Corp ($5500-$500) $5000

Cr Cash (5000*99%) $4950

Cr Merchandise inventory $50

($5000-$4950)