Question

Purchase-Related Transactions Using Perpetual Inventory System The following selected transactions were completed by Niles Co. during March of the current year:
Mar. 1. Purchased merchandise from Haas Co., $13,900, terms FOB shipping point, 2/10, n/eom. Prepaid freight of $550 was added to the invoice.
5. Purchased merchandise from Whitman Co., $10,650, terms FOB destination, n/30.
10. Paid Haas Co. for invoice of March 1.
13. Purchased merchandise from Jost Co., $7,100, terms FOB destination, 1/10, n/30.
14. Issued debit memo to Jost Co. for $1,300 of merchandise returned from purchase on March 13.
18. Purchased merchandise from Fairhurst Company, $9,600, terms FOB shipping point, n/eom.
18. Paid freight of $310 on March 18 purchase from Fairhurst Company.
19. Purchased merchandise from Bickle Co., $13,800, terms FOB destination, 2/10, n/30.
23. Paid Jost Co. for invoice of March 13, less debit memo of March 14.
29. Paid Bickle Co. for invoice of March 19.
31. Paid Fairhurst Company for invoice of March 18.
31. Paid Whitman Co. for invoice of March 5.
Required: Journalize the entries to record the transactions of Britt Co. for March. Mar. 1 Mar. 5 Mar. 10 Mar. 13 Mar. 14 Mar. 18-purchase Mar. 18-freight Mar. 19 Mar. 23 Mar. 29 Mar. 31-Fairhurst Mar. 31-Whitman

Answer 1

Answer:

Mar. 1

Merchandise $13,900 (debit)

Freight Charges Prepaid $550 (debit)

Accounts Payable : Haas Co. $13,900 (credit)

Cash $550 (credit)

Mar. 5

Merchandise $10,650 (debit)

Accounts Payable : Whitman Co. $10,650 (credit)

Mar. 10

Accounts Payable : Haas Co. $13,622 (debit)

Cash $13,622 (credit)

Mar. 13

Merchandise $7,100 (debit)

Accounts Payable : Jost Co. $7,100 (credit)

Mar. 14

Accounts Payable : Jost Co. $1,300 (debit)

Merchandise $1,300 (credit)

Mar. 18-purchase

Merchandise $9,600 (debit)

Accounts Payable : Fairhurst Company $9,600 (credit)

Mar. 18-freight

Freight Charges $310 (debit)

Cash $310 (credit)

Mar. 19

Merchandise $13,800(debit)

Accounts Payable : Bickle Co. $13,800 (credit)

Mar. 23

Accounts Payable : Jost Co. $5,742 (debit)

Cash $5,742 (credit)

Mar. 29

Accounts Payable : Bickle Co. $13,524 (debit)

Cash $13,524 (credit)

Mar. 31-Fairhurst

Accounts Payable : Fairhurst. $9,600 (debit)

Cash $9,600 (credit)

Mar. 31-Whitman

Accounts Payable : Whitman $10,650 (debit)

Cash $10,650 (credit)

Explanation:

When Merchandise is purchased on Account,

Recognize the Merchandise Account (debit) and recognize the Accounts Payable Account (credit).

When Merchandise is finally paid for.

First determine if payment fall within discount period.

Also determine if there were previous returns to supplier.

Then de-recognize the Accounts Payable Account and recognize the Cash Payment to the extend of amount paid.