This information relates to Locke Co. On April 5, purchased merchandise from K.
ID: 2346818 • Letter: T
Question
This information relates to Locke Co.On April 5, purchased merchandise from K. Austen Company for $28,860, terms 2/10, net/30, FOB shipping point.
On April 6, paid freight costs of $970 on merchandise purchased from K. Austen Company.
On April 7, purchased equipment on account for $31,632.
On April 8, returned some of April 5 merchandise, which cost $2,853, 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.)
Date Description/Account Debit Credit
Apr. 5
Apr. 6
Apr. 7
Apr. 8
Apr. 15
(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.
Date Description/Account Debit Credit
May 4
Explanation / Answer
Apr. 5 Merchandise Inv Dr 28860 Acct Payable -Austen Cr 28860 (FOB shipping pt indicated that buyer pays shipping, 2/10 net 30) Apr. 6 Freight-In Dr 970 Cash Cr 970 (Buyer paid Freight as FOB shipping pt) Apr. 7 Eqpt Acct Dr 31632 Acct Payable Cr 31632 Apr. 8 Acct Payable-Austen Dr 2853 Nerchandise Inv Cr 2853 (Merchandise returned to Austen) Apr. 15 Acct Payable - Asuten Dr $25,487 Cash Cr $25,487 (Paid Austen (28860-2853)*98% = $25,487, Disc availed $520) If payment is made on May 4, the 2% disc for payment within 10 days wont be available. May 4 Acct Payable - Asuten Dr $26,007 Cash Cr $26,007 (Paid Austen (28860-2853) = $26,007 )
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