This information relates to Locke Co. On April 5, purchased merchandise from K.

Question

This information relates to Locke Co.

On April 5, purchased merchandise from K. Austen Company for $21,980, terms 2/10, net/30, FOB shipping point.
On April 6, paid freight costs of $1,010 on merchandise purchased from K. Austen Company.
On April 7, purchased equipment on account for $35,331.
On April 8, returned some of April 5 merchandise, which cost $3,536, to K. Austen Company.
On April 15, paid the amount due to K. Austen Company in full.
Instructions

(a) Prepare the journal entries to record these transactions on the books of Locke Co. using a periodic inventory system. (For multiple debit/credit entries, list amounts from largest to smallest e.g. 10, 5, 3, 2. Round answers to 0 decimal places, e.g. 125.)


(b) Assume that Locke Co. paid the balance due to K. Austen Company on May 4 instead of April 15. Prepare the journal entry to record this payment.

Explanation / Answer

(a) Prepare the journal entries to record these transactions on the books of Locke Co. using a periodic inventory system. (For multiple debit/credit entries, list amounts from largest to smallest e.g. 10, 5, 3, 2. Round answers to 0 decimal places, e.g. 125.)

On April 5, purchased merchandise from K. Austen Company for $21,980, terms 2/10, net/30, FOB shipping point.

Purchases                                     $21,980
     Accounts Payable (K. Austen)                     $21,980
Bought merchasndise from k.Austen on terms 2/10, net/30
____________________________________________________
On April 6, paid freight costs of $1,010 on merchandise purchased from K. Austen Company.
Freight-In                                     $1,010
      Cash                                                       $1,010
Paid freight charges on merchandise purchased from K.Austen
______________________________________________________
On April 7, purchased equipment on account for $35,331.
Equipment                          $35,331
         Accounts Payable                         $35,331
To record purchase of equipment on credit
_______________________________________________________
On April 8, returned some of April 5 merchandise, which cost $3,536, to K. Austen Company.
Accounts Payable (K.Austen)          $3,536
     Purchase Returns & Allowances                 $3,536
To record return of goods to K.Austen
________________________________________________________
On April 15, paid the amount due to K. Austen Company in full.
Accounts Payable (K.Austen)    $18,444
    Cash                                             $18,433.75
     Purchase Discount                               $10.25
Final settlement of accounts due to K.Austen
________________________________________________________

(b) Assume that Locke Co. paid the balance due to K. Austen Company on May 4 instead of April 15. Prepare the journal entry to record this payment.
Accounts Payable (K.Austen)    $18,444
    Cash                                             $18,444
     Final settlement of accounts due to K.Austen
____________________________________________

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