Question

On June 10, Diaz Company purchased $10,000 of merchandise from Taylor Company, FOB shipping point, terms 1/10, n/30. Diaz pays the freight costs of $610 on June 11. Damaged goods totaling $360 are returned to Taylor for credit on June 12. The fair value of these goods is $75. On June 19, Diaz pays Taylor Company in full, less the purchase discount. Both companies use a perpetual inventory system.
Prepare separate entries for each transaction on the books of Diaz Company. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. Round answers to 0 decimal places, e.g. 5,275.)

Answer 1

Answer:

Explanation:

The journal entries are shown below:

On June 10

Merchandise Inventory A/c $10,000

              To Accounts payable A/c $10,000

(Being goods purchased on credit)

On June 11

Merchandise inventory A/c Dr $610

           To Cash A/c $610

(Being freight is paid by cash)

On June 12

Accounts payable A/c Dr $360

    To Merchandise Inventory A/c $360

(Being goods returned)

On June 19

Accounts payable A/c Dr $9,640 ($10,000  - $360)

     To Cash A/c  $9,543.60                       

     To Merchandise Inventory A/c  $96.4 ($10,000  - $360)× 1%

(Being due amount is paid and the remaining amount is credited to the cash account)