Apr. 2 Purchased $4,600 of merchandise from Lyon Company with credit terms of 2/

Question

Apr. 2 Purchased $4,600 of merchandise from Lyon Company with credit terms of 2/15, n/60, invoice dated April 2, and FOB shipping point 4 Returned to Lyon Company unacceptable merchandise that had an invoice price of $600 17 Sent a check to Lyon Company for the April 2 purchase, net of the discount and the returned merchandise. 18 Purchased $8,500 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 $8,500 owed on the April 18 purchase. 28 Sent check to Frist paying for the April 18 purchase, net of the allowance and the discount.

Explanation / Answer

Journal entry :

Date account and explanation debit credit Apr 2 Merchandise inventory 4600 Account payable 4600 (To record purchase) Apr 3 Merchandise inventory 300 Cash 300 (To record freight paid) Apr 4 Account payable 600 Merchandise inventory 600 (To record purchase return) Apr 17 Account payable (4600-600) 4000 Bank (4000*98%) 3920 Merchandise inventory (4000*2%) 80 (TO record amount paid) Apr 18 Merchandise inventory 8500 Account payable 8500 (To record purchase) Apr 21 Account payable 500 Merchandise inventory 500 (To record purchase allowance) Apr 28 Account payable 8000 Bank (8000*99%) 7920 Merchandise inventory 80 (To record amount paid)

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