E5-1 this infromation relates to precy Co. 1.on april 5, purchased merchandise f

Question

E5-1 this infromation relates to precy Co.

1.on april 5, purchased merchandise from Lyman company for $28,000, terms 2/10, n/30.

2.on april 6, paid freight costs of $700 on merchandise purchased from Lyman.

3.On april 7, purchased equipment on account for $30,000.

4.On april 8, returned some of april 5 merchandise to Lyman company, which cost $3,600

5. on april 15, paid the amount due to Lyman company in full

Instructions

(a) prepare the journal entries to record the transactions listed above on the books of Percy Co. Percy Co. uses a perpetual inventory system.

(b) assume that Percy Co. paid the balance due to Lyman company on may 4 instead of april 15. prepare the journal entry to record this payment

Explanation / Answer

Under perpetual inventory system, changes in merchandise inventory account are recorded after each transaction. 5 Apr Merchandise Inventory Dr 28000 Accounts payable (Lyman) Cr 28000 purchased merchandise from Lyman company 6 Apr Freight Exp Dr 700 Cash Cr 700 Payment of freight for Goods bought from Lyman 7 Apr Equipment A/c Dr 30000 Acct Payable Cr 30000 equipment purchased on account 8 APr Accounts payable (Lyman) Dr 3600 Merchandise Inventory Cr 3600 returned merchandise to Lyman company 15Apr Accounts Payable (Lyman Co) Dr 24,400 Bank Cr $23,912 Purch Disc Cr 488 As payment made within 10 days, 2% disc (2/10, n/30) on (28000-3600)*2%=$488 is availed 4 May Accounts Payable (Lyman Co) Dr 24,400 Bank Cr $24,400 As payment made after 10 days, No discount is allowed (28000-3600)=24400

Related Questions

Navigate

• Browse (All)
• Browse E
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.