Apr. 2 Purchased $3,600 of merchandise from Lyon Company with credit terms of 2/

Question

Apr. 2 Purchased $3,600 of merchandise from Lyon Company with credit terms of 2/15, n/60, invoice dated April 2, and FOB shipping point.

3 Paid $202 cash for shipping charges on the April 2 purchase.

4 Returned to Lyon Company unacceptable merchandise that had an invoice price of $550.

17 Sent a check to Lyon Company for the April 2 purchase, net of the discount and the returned merchandise.

18 Purchased $7,900 of merchandise from Frist Corp. with credit terms of 1/10, n/30, invoice dated April 18, and FOB destination.

21 After negotiations, received from Frist a $500 allowance toward the $7,900 owed on the April 18 purchase.

28 Sent check to Frist paying for the April 18 purchase, net of the allowance and the discount.

Prepare journal entries to record each of the above merchandising transactions assuming that the buyer uses the periodic inventory system and the gross method.

Explanation / Answer

Journal entries :

Date accounts & explanation debit credit Apr 2 Purchase 3600 account payable-Lyon company 3600 (To record merchandise purchase) April 3 Freight-in 202 Cash 202 (To record shipping charges paid ) April 4 Account payable-Lyon company 550 Purchase return 550 (To record purchase return) Apr 17 Account payable-Lyon company 3050 Bank (3050*98%) 2989 Purchase discount (3050*2%) 61 (To record amount paid) Apr 18 Purchase 7900 Account payable-Frist corp. 7900 (To record merchandise purchase) Apr 21 Account payable-Frist corp. 500 Purchase allowance a/c 500 (To record purchase allowance received) Apr 28 Account payable-Frist corp. 7400 Bank (7400*99%) 7326 Purchase discount (7400*1%) 74 (To record amount paid)

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