Question

Recording purchases, purchases returns, and purchases allowances LO P1 Prepare journal entries to record the following transactions for a retail store. The company uses a perpetual inventory system and the gross method. Apr. 2 Purchased $5,000 of merchandise from Lyon Company with credit terms of 2/15, n/60, invoice dated April 2, and FOB shipping point. 3 Paid $220 cash for shipping charges on the April 2 purchase. 4 Returned to Lyon Company unacceptable merchandise that had an invoice price of $750. 17 Sent a check to Lyon Company for the April 2 purchase, net of the discount and the returned merchandise. 18 Purchased $9,300 of merchandise from Frist Corp. with credit terms of 1/10, n/30, invoice dated April 18, and FOB destination. 21 After negotiations, received from Frist a $500 allowance toward the $9,300 owed on the April 18 purchase. 28 Sent check to Frist paying for the April 18 purchase, net of the allowance and the discount.

Answer 1

Answer: See attachment

Explanation:

Note:

April 17:

Account payable- Lyon Company:

= $5000 - $750

= $4250

Merchandise inventory:

= $4250 × 2%

= $4250 × 0.02

= $85

Cash = $4250 - $85

= $4165

April 28:

Account payable- Frist Corp:

= $9300 - $500

= $8800

Merchandise inventory:

= $8800 × 1%

= $8800 × 0.01

= $88

Cash = $8800 - $88

= $8712

Check the attachment for further information