Question

Record transactions of purchasing company. On October 5, Splish Brothers Company buys merchandise on account from Bramble Company. The selling price of the goods is $4,700, and the cost to Bramble Company is $2,820. On October 8, Splish Brothers returns defective goods with a selling price of $720 and a fair value of $125.Record the transactions of Splish BrothersCompany, assuming a perpetual approach.

Answer 1

Answer:

See explanation section

Explanation:

October 5       Merchandise Inventory       Debit      $4,700

                       Accounts Payable - Bramble Company    Credit    $4,700

To record the merchandise Inventory purchase on account. As the company uses perpetual inventory system, merchandise inventory becomes debit instead of purchase account.

October 8        Accounts payable         Debit       $720

                        Merchandise Inventory       credit         $720

To record the return of defective goods to Bramble Company. (Using perpetual inventory system)