Cornerstone Exercise 6-20 (Algorithmic) Recording Purchase Transactions Mathis C

Question

Cornerstone Exercise 6-20 (Algorithmic) Recording Purchase Transactions Mathis Company and Reece Company use the perpetual inventory system. The following transactions occurred during the month of April a. On April 1, Mathis Company purchased merchandise on account from Reece Company with credit terms of 2/10, n/30. The selling price of the merchandise was $2,800, and the cost of the merchandise sold was $2,450 b. On April 1, Mathis paid freight charges of $100 cash to have the goods delivered to its warehouse. c. On April 8, Mathis returned $1,000 of the merchandise which had originally cost Reece $700. d. On April 10, Mathis paid Reece the balance due Required: Prepare the journal entry to record the April 1 purchase (ignore any freight charges) of merchandise by Mathis Company. April 1 Inventory Accounts Payable (Purchased inventory on account) Feedback Prepare the journal entry to record the payment of freight on April 1 April 1 Inventory Cash Recorded the payment of freight charges) Feedback Prepare the journal entry to record the April 8 return of merchandise April 8 Accounts Payable InventoryY (Returned merchandise) Feedback Prepare the journal entry to record the April 10 payment to Reece Company, If an amount box does not require an entry, leave it blank. April 10 Accounts Payable Cash Inventory (Paid accounts payable within discount period)

Explanation / Answer

Journal entries: 1-Apr Inventory Account Dr. 2800     Accounts payable 2800 1-Apr Inventory Account Dr. 100      Cash account 100 8-Apr Accounts payable Dr. 1000       Inventory 1000 10-Apr Accounts payable Dr. 1800         Cash account 1764         Inventory Account (1800*2%) 36

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