Answer:
A) Prepare the journal entries to record these transactions on the books of Harwick Co. under a perpetual inventory system.
April 5, purchased merchandise terms 3/10, net/30, FOB shipping point
Dr Merchandise inventory 32,400
Cr Accounts payable 32,4000
April 6, paid freight costs (in perpetual inventory, freight ans insurance costs increase COGS so they are included in merchandise inventory)
Dr Merchandise inventory 860
Cr Cash 860
April 7, purchased equipment on account
Dr Equipment 40,000
Cr Accounts payable 40,000
April 8, returned damaged merchandise
Dr Accounts payable 6,800
Cr Merchandise inventory 6,800
April 15, paid Botham's invoice within discount term
Dr Accounts payable 25,600
Cr Cash 24,832
Cr Purchase discounts 768
B) Assume that Harwick Co. paid the balance due to Botham Company on May 4 instead of April 15. Prepare the journal entry to record this payment.
May 4, paid Botham's invoice
Dr Accounts payable 25,600
Cr Cash 25,600
