Answer:
Stylon Co.
Journal Entries:
a) Debit Inventory $48,000
Credit Accounts Payable $48,000
To record good purchased: terms, FOB destination, 2/10, n/30.
b) Debit Accounts Payable $7,500
Credit Inventory $7,500
To record return of merchandise.
c) Debit Account Payable $40,500
Credit Cash Discount $810
Credit Cash Account $39,690
To record payment to suppliers within 10 days.
d) Debit Account Payable $40,500
Credit Cash Account $40,500
To record payment to suppliers after 10 days.
Explanation:
a) Journal entries are made when transactions take place to recognize them in the books of accounts. They show which account is debited and which is credited in the Ledger.
b) Under the perpetual inventory system, the purchase and return of merchandise are recorded in the Inventory Account in order to strike a continuous balance per each transaction. It is unlike the periodic inventory system which records purchase and return of merchandise in the Purchases Account. Inventory is then accounted for when a physical count is carried out at the end of the period.
