Purchased 600 units of product at a cost of $10 per unit. Terms of the sale are

Question

Purchased 600 units of product at a cost of $10 per unit. Terms of the sale are 2/10, n/60; the invoice is dated November 5.

    

Prepare journal entries to record each of the merchandising transactions assuming that the PERIODIC inventory system is used.

Nov. 5

Purchased 600 units of product at a cost of $10 per unit. Terms of the sale are 2/10, n/60; the invoice is dated November 5.

Nov. 7 Returned 25 defective units from the November 5 purchase and received full credit. Nov. 15 Paid the amount due from the November 5 purchase, less the return on November 7.

Explanation / Answer

Journal entry ;

Date account & explanation debit credit Nov 5 Purchase 6000 Account payable 6000 (To record purchase) Nov 7 Account payable (25*10) 250 Purchase return and allowance 250 (To record purchase return) Nov 15 Account payable (6000-250) 5750 Cash (5750*98%) 5635 Purchase discount 115 (To record amount paid)

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