<p>Prepare the journal entries to record the following transactions on Churchill

Question

<p>Prepare the journal entries to record the following transactions on Churchill Company's books using a perpetual inventory system. <br /><br />A]On March 2, Monroe Company sold $891,720 of merchandise to Churchill Company, terms 2/10, n/30. The cost of the merchandise sold was $628,410.<br /><br />B]On March 6, Churchill Company returned $125,600 of the merchandise purchased on March 2 because it was defective. The cost of the returned merchandise was $90,710 .<br /><br />C]On March 12, Monroe Company received the balance due from Churchill Company.</p>

Explanation / Answer

12-Mar

Debit $ Credit $ 2-Mar Inventory 891720     Accounts payble 891720 (To credit purchases) 2-Mar Accounts payble 125600     Inventory 125600 (To purchase returns) 6-Mar Cash 628410      Sales 628410 (To cash sales) Sales returns 90710     Cash 90710 (To Sales returns) 12-Mar Accounts payble 766120      Cash 750798      Discount Received 15322 (To cash paid and 2% discount received) Working: Inventory purchases 891720 Less: Returns 125600 766120 Less: Discount received 2% 15322 (766120 * 2%) Cash has to pay 750798

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