James Company began the month of October with inventory of $29,000. The followin

Question

James Company began the month of October with inventory of $29,000. The following inventory transactions occurred during the month: a. The company purchased merchandise on account for $43,000 on October 12, 2013. Terms of the purchase were 3/10, n/30. James uses the net method to record purchases. The merchandise was shipped f.o.b. shipping point and freight charges of $640 were paid in cash. b. On October 18 the company returned merchandise costing $4,400. The return reduced the amount owed to the supplier. The merchandise returned came from beginning inventory, not from the October 12 purchase. c. On October 31, James paid for the merchandise purchased on October 12. d. During October merchandise costing $20,100 was sold on account for $30,800. e. It was determined that inventory on hand at the end of October cost $46,850.

Explanation / Answer

Debit Purchases        43,000 Credit Accounts Payable        43,000 Debit Purchases              640 Credit Cash              640 Debit Accounts Payable           4,400 Credit Purchase return           4,400 Debit Accounts Payable        43,000 Credit Cash        43,000 Debit Accounts Receiveble        30,800 Credit Sales        30,800

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