Question

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 $6,100 of merchandise from Lyon Company with credit terms of 2/15, n/60, invoice dated April 2, and FOB shipping point.
Apr. 3 Paid $280 cash for shipping charges on the April 2 purchase.
Apr. 4 Returned to Lyon Company unacceptable merchandise that had an invoice price of $650.
Apr. 17 Sent a check to Lyon Company for the April 2 purchase, net of the discount and the returned merchandise.
Apr. 18 Purchased $11,500 of merchandise from Frist Corp. with credit terms of 1/10, n/30, invoice dated April 18, and FOB destination.
Apr. 21 After negotiations, received from Frist a $600 allowance toward the $11,500 owed on the April 18 purchase.
Apr. 28 Sent check to Frist paying for the April 18 purchase, net of the allowance and the discount.

Answer 1

Answer and Explanation:

The journal entries are shown below:

On April 02

Merchandise inventory  Dr6100

     To Accounts payable-Lyon   6100

On April 03

Merchandise inventory  $280

       To Cash  $280

On April 04

Accounts payable-Lyon  $650

       To Merchandise inventory  $650

On April 17

Accounts payable-Lyon  $5450

        To Merchandise inventory  $109

        To Cash  $5341  [($6100 − $650) × (100% − 2%)]  

On April 18

Merchandise inventory  $11500

    To Accounts payable-First Corp.  $11500

On April 21

Accounts payable-First Corp.  $600

      To Merchandise inventory  $600

On April 28

Accounts payable-First Corp.  $10900

     To Merchandise inventory  $109

     To Cash  $10791 [($11500 − $600) × (100% − 1%)]