Purchased merchandise from Abilene Company for $6,000 under credit terms of 1/10

Question

Purchased merchandise from Abilene Company for $6,000 under credit terms of 1/10, n/30, FOB destination, invoice dated August 1.
4
At Abilene's request, Stone paid $100 cash for freight charges on the August 1 purchase, reducing the amount owed to Abilene.
5
Sold merchandise to Lux Corp. for $4,200 under credit terms of 2/10, n/60, FOB destination, invoice dated August 5. The merchandise had cost $3,000.
8
Purchased merchandise from Welch Corporation for $5,300 under credit terms of 1/10, n/45, FOB shipping point, invoice dated August 8. The invoice showed that at Stone

Explanation / Answer

Aug 1 Debit Inventory $6,000 Credit Accounts Payable - Abilene $6,000 Aug 4 Debit Inventory $100 Credit Cash $100 Aug 5 Debit Accounts Receivable - Lux $4,200 Debit Cost of Goods Sold $3,000 Credit Sales $4,200 Credit Inventory $3,000 Aug 8 Debit Inventory $5,540 [$5,300 + $240] Credit Accounts Payable - Welch $5,540 Aug 9 Debit Delivery Expense $120 Credit Cash $120 Aug 10 Debit Sales Returns and Allowances $700 Debit Inventory $500 Credit Accounts Receivable - Lux $700 Credit Cost of Goods Sold $500 Aug 12 Debit Accounts Payable - Welch $800 Credit Inventory $800 Aug 15 Debit Cash $3,430 Debit Sales Discounts $70 [$3,500 x 2%] Credit Accounts Receivable - Lux $3,500 [$4,200 - $700] Aug 18 Debit Accounts Payable - Welch $4,740 [$5,300 + 240 - $800] Credit Inventory $45 [($5,300 - $800) x 1%] Credit Cash $4,695 Aug 19 Debit Accounts Receivable - Trax $3,600 Debit Cost of Goods Sold $2,500 Credit Sales $3,600 Credit Inventory $2,500 Aug 22 Debit Sales Returns and Allowances $600 Credit Accounts Receivable - Trax $600 Aug 29 Debit Cash $2,970 Debit Sales Discounts $30 [($3,600 - $600) x 1%] Credit Accounts Receivable - Trax $3,000 [$3,600 - $600] Aug 30 Debit Accounts Payable - Abilene $6,000 Credit Cash $6,000

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