Warwick\'s Co., a women\'s clothing store, purchased $75,000 of merchandise from
ID: 2488242 • Letter: W
Question
Warwick's Co., a women's clothing store, purchased $75,000 of merchandise from a supplier on account, terms FOB destination, 2/10, n/30. Warwick's returned $9,000 of the merchandise, receiving a credit memo, and then paid the amount due within the discount period. Journalize Warwick's entries to record the purchase, the merchandise return, and the payment. Journalize entries for the following related transactions of South Coast Heating & Air Company: Purchased 548,000 of merchandise from Atlas Co. on account, terms 1/10, n/30. Paid the amount owed on the invoice within the discount period. Discovered that 57,500 of the merchandise purchased in was defective and returned items, receiving credit. Purchased 56.000 of merchandise from Atlas Co. on account, terms n/30. Received a refund from Atlas Co. for return in (c) less the purchase in (d). Journalize the entries for the following transactions:Explanation / Answer
1.
Account titles and explanations
Debit
Credit
(a)
Merchandise inventory
$ 75,000
Accounts payable
$ 75,000
(b)
Accounts payable
$ 9,000
Merchandise inventory
$ 9,000
(c)
Accounts payable
$ 66,000
Cash
$ 64,680
Merchandise inventory {($75,000 - $9,000)*2%}
$ 1,320
2.
Account titles and explanations
Debit
Credit
(a)
Merchandise inventory
$ 48,000
Accounts payable
$ 48,000
(b)
Accounts payable
$ 48,000
Cash
$ 47,520
Merchandise inventory ($48,000*1%)
$ 480
(c)
Accounts payable
$ 7,425
Merchandise inventory ($7,500*99%)
$ 7,425
(d)
Merchandise inventory
$ 6,000
Accounts payable
$ 6,000
(e)
Cash
$ 1,425
Accounts payable ($7,425 - $6,000)
$ 1,425
Account titles and explanations
Debit
Credit
(a)
Merchandise inventory
$ 75,000
Accounts payable
$ 75,000
(b)
Accounts payable
$ 9,000
Merchandise inventory
$ 9,000
(c)
Accounts payable
$ 66,000
Cash
$ 64,680
Merchandise inventory {($75,000 - $9,000)*2%}
$ 1,320
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