On October 1, Lance\'s Bicycle Store had an inventory of 20 ten speed bicycles a
ID: 2466672 • Letter: O
Question
On October 1, Lance's Bicycle Store had an inventory of 20 ten speed bicycles at a cost of $350 each. During the month of October, the following transactions occurred.
Oct.
4
Purchased 40 bicycles at a cost of $350 each from Lamont Bicycle Company, terms 1/10, n/30.
6
Sold 20 bicycles to Team Minnesota for $500 each, terms 2/10, n/30.
7
Received credit from Lamont Bicycle Company for the return of 2 defective bicycles.
13
Issued a credit memo to Team Minnesota for the return of a defective bicycle.
14
Paid Lamont Bicycle Company in full, less discount.
Instructions
Prepare the journal entries to record the transactions assuming the company uses a perpetual inventory system.
Please show work.
Oct.
4
Purchased 40 bicycles at a cost of $350 each from Lamont Bicycle Company, terms 1/10, n/30.
6
Sold 20 bicycles to Team Minnesota for $500 each, terms 2/10, n/30.
7
Received credit from Lamont Bicycle Company for the return of 2 defective bicycles.
13
Issued a credit memo to Team Minnesota for the return of a defective bicycle.
14
Paid Lamont Bicycle Company in full, less discount.
Explanation / Answer
Journal Entries Date Account Title and Explanation Debit Credit Oct-04 Purchases 14000 Lamont Bicycle Company 14000 (Purchased 40 bicycles @ $350 each on Credit term 1/10,n/30) Oct-06 Team Minnesota 10000 Sales 10000 (Sold 20 bicycles @ $500 each on credit term 2/10.n/30) Oct-07 Lamont Bicycle Company 700 Purchase Return 700 (2 defective bicycles sent back) Oct-13 Sales Return 500 Team Minnesota 500 (1 defective bicycles returned by Team Minnesota) Oct-14 Lamont Bicycle Company 13300 Cash 13167 Cash discount 133 (Paid amount within 10 days of purchase & got 1 % discount) Discount Calculation from Lamont Bicycle Company Purchases 14000 Less : Purchase return 700 Net amount payable 13300 1% discount on net payable 133
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