E5B-29 Journalizing purchase transactions—periodic inventory system Learning Obj

Question

E5B-29 Journalizing purchase transactions—periodic inventory system

Learning Objective 8 Appendix 5B

Lawrence Appliances had the following purchase transactions. Journalize all necessary transactions using the periodic inventory system. Explanations are not required.

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Sep. 4 Purchased inventory of $6,900 on account from Max Appliance Wholesale, an appliance wholesaler. Terms were 3/15, n/30, FOB shipping point. 4 Paid freight charges, $480. 10 Returned $300 of inventory to Max. 17 Paid Max Appliance Wholesale, less return and discount. 20 Purchased inventory of $3,900 on account from MY Appliance, an appliance wholesaler. Terms were 1/10, n/45, FOB destination. 22 Received a $400 allowance from MY Appliance for damaged but usable goods. 29 Paid MY Appliance, less allowance and discount.

Explanation / Answer

Solution:

Journal Entries Date Particulars Debit Credit 4-Sep Purchases Dr $6,900.00             To Accounts Payable $6,900.00 4-Sep Freight Inward Dr $480.00             To Cash $480.00 10-Sep Accounts Payable Dr $300.00             To Purchase returns and allowances $300.00 17-Sep Accounts Payable Dr $6,600.00             To Cash $6,402.00             To Purchase discount $198.00 20-Nov Purchases Dr $3,900.00             To Accounts Payable $3,900.00 (To record cost of goods sold) 22-Nov Accounts Payable Dr $400.00             To Purchase returns and allowances $400.00 29-Nov Accounts Payable Dr $3,500.00             To Cash $3,465.00             To Purchase discount $35.00

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