Question

Recording purchases, purchases returns, and purchases allowances LO P1

Prepare journal entries to record the following transactions for a retail store. The company uses a perpetual inventory system and the gross method
Apr. 2 Purchased $3,3ee of merchandise from Lyon Company with credit terms of 2/15, n/60, invoice dated .April 2, and FOB shipping point.
3 Paid $240 cash for shipping charges on the April 2 purchase.
4 Returned to Lyon Company unacceptable merchandise that had an invoice price of $800.
17 Sent a check to Lyon Company for the April 2 purchase, net of the discount and the returned
merchandise.
18 Purchased $5,90e of merchandise from Frist Corp. with credit terms of 1/1e, n/30, invoice dated April 18,
and FOB destination.
21 After negotiations, received from Frist a $400 allowance toward the $5,90e owed on the April 18
purchase.
28 Sent check to Frist paying for the April 18 purchase, net of the allowance and the discount.
Journal entry worksheet
1 2 3 4 5 6
Purchased $3,300 of merchandise from Lyon Company with credit terms of 2/15, n/60, invoice dated April 2, and FOB shipping point.
Note:
Date General Journal Debit Credit
Apr 02

Answer 1

Answer:

Journal entries

1.

Dr Merchandise inventory 3,300

Cr Account payable 3,300

(To record purchase)

2.

Dr Merchandise inventory 240

Cr Cash 240

(To record shipping charges)

3.

Dr Account payable 800

Cr Merchandise inventory 800

(To record the amount of purchase return)

4.

Dr Account payable 2,500

Cr Bank 2,450

Cr Merchandise inventory 50

(To record amount paid)

5.

Dr Merchandise inventory 5,900

Cr Account payable 5,900

(To record purchase)

6.

Dr Account payable 400

Merchandise inventory 400

(To record allowance)

7.

Dr Account payable 5,500

Cr Cash 5,445

Cr Merchandise inventory 55

(To record amount paid)

Explanation :

1. To record purchase

2.To record shipping charges

3.To record the amount of purchase return

4. Calculation for Bank and Merchandise inventory

Bank(2,500*98%) 2,450

Merchandise inventory (2500-2,450) 50

To record amount paid

5.To record purchase

6.To record allowance

7. Calculation for Account payable, Cash and Merchandise inventory

Account payable (5,900-400) 5,500

Cash (5,500*99%) 5,445

Merchandise inventory (5,500-5,445) 55

To record amount paid