Chapter 6 1. Purchase Transactions- Extra Practice/Quiz Prepare the necessary jo

Question

Chapter 6 1. Purchase Transactions- Extra Practice/Quiz Prepare the necessary journal entries for the following selected transactions that were completed by Tulip Company during March of the current year. March 1 Purchased merchandise on account from Reuben Company, $7,500, Terms FOB Destination, 2/10,n/30. March 4 Returned $500 of merchandise to Reuben Co. March 10 Paid Reuben Co. for March 1t invoice, less return and discount. March 11 Purchased merchandise from Geneva Co., $5,000, terms FOB shipping Point, 1/10,n/30, with prepaid transportation cost of $200 added to the Invoice. March 21 Paid Geneva Co. for March 11 purchase, less discount. March 22 Purchased merchandise on account from Elvira Co, $4,400, terms FOB Shipping Point, 2/10,n/30. March 22 Paid $100 shipping cost for above purchase. March 31 Paid Elvira Co. for merchandise purchased on March 22 nd

Explanation / Answer

Journal Entries: Date Accounts Title and explanations Debit $ Credit $ 1-Mar Inventory Dr. 7500    Accounts payable 7500 4-Mar Accounts Payable Dr. 500     Inventory Account 500 10-Mar Accounts Payable Dr. 7000      Cash Account 6860      Inventory Account (7000*2%) 140 11-Mar Inventory Account Dr. 5200      Accounts payable 5000      Cash Account 200 21-Mar Accounts payable Dr. 5000      Inventory (5000*1%) 50      Cash Account 4950 22-Mar Inventory Dr. 4400       Accounts payable 4400 22-Mar Inventory Dr. 100      Cash Account 100 31-Mar Accounts Inventory Dr. 4400      Cash Account 4312      Inventory (4400*2%) 88

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