Purchase-Related Transactions Warwick’s Co., a women\'s clothing store, purchase

Question

Purchase-Related Transactions Warwick’s Co., a women's clothing store, purchased $26,000 of merchandise from a supplier on account, terms FOB destination, 1/10, n/30. Warwick’s returned $3,900 of the merchandise, receiving a credit memo, and then paid the amount due within the discount period. a. Journalize Warwick’s Co.'s entry to record the purchase. Merchandise Inventory 26,000 Accounts Payable 26,000 Feedback a. A purchase increases Merchandise Inventory and Accounts Payable. b. Journalize Warwick’s Co.'s entry to record the merchandise return. Accounts Payable 3,900 Merchandise Inventory 3,900 Feedback b. A return reduces Merchandise Inventory and Accounts Payable in the purchaser's records. c. Journalize Warwick’s Co.'s entry to record the payment.

Purchase-Related Transactions

Warwick’s Co., a women's clothing store, purchased $26,000 of merchandise from a supplier on account, terms FOB destination, 1/10, n/30. Warwick’s returned $3,900 of the merchandise, receiving a credit memo, and then paid the amount due within the discount period.

a. Journalize Warwick’s Co.'s entry to record the purchase.

Feedback

a. A purchase increases Merchandise Inventory and Accounts Payable.

b. Journalize Warwick’s Co.'s entry to record the merchandise return.

Feedback

b. A return reduces Merchandise Inventory and Accounts Payable in the purchaser's records.

c. Journalize Warwick’s Co.'s entry to record the payment.

Explanation / Answer

a Journalize Warwick’s Co.'s entry to record the purchase Merchandise Inventory 26000 To Accounts Payable 26000 A purchase increases Merchandise Inventory and Accounts Payable. b Accounts Payable 3900 To Merchandise Inventory 3900 A return reduces Merchandise Inventory and Accounts Payable in the purchaser's records. c Journalize Warwick’s Co.'s entry to record the payment. Accounts Payable 22100 To Cash 21879 To Discount 221 (26000-3900)*1% On payment accounts payable reduces and cash also reduces Since paid within 10 days discount of 1% is received

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