This information relates to Crisp Co. On April 5, purchased merchandise from Fro

Question

This information relates to Crisp Co. On April 5, purchased merchandise from Frost Company for $28,000, terms 2/10, n/30. On April 6, paid freight costs of $700 on merchandise purchased from Frost. On April 7, purchased equipment on account for $30,000. On April 8, returned $3,600 of April 5 merchandise to Frost Company. On April 15, paid the amount due to Frost Company in full. Instructions Prepare the journal entries to record the transactions listed above on Crisp Co.'s books. Crisp Co. uses a perpetual inventory system. Assume that Crisp Co. paid the balance due to Frost Company on May 4 instead of April 15. Prepare the journal entry to record this payment.

Explanation / Answer

Journal entries in the books of Crisp Co (Under Perpectual Inventory System) Amount in $ Date Accounting Particulars Debit Credit 5-Apr Inventory - Dr 28000    To Frost 28000 (Being Inventory Purchased from Frost on the credit basis) 6-Apr Freight a/c - Dr 700    To Cash 700 (Being Freight paid for merchandise purchased from the Frost) 7-Apr Equipment - Dr 30000     To Cash 30000 (Being Equipment purchased on account of 30000) 8-Apr Frost 3600    To Inventory 3600 (Being Returned the inventory to the Frost of $ 3600) 15-Apr Frost - Dr 24400    To Cash 24400 (Being Paid the amount due to Frost company full) Question - B Amount in $ Date Accounting Particulars Debit Credit 4-May Frost - Dr 24400    To Cash 24400 (Being Paid the amount due to Frost company full)

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