1. On April 5, purchased merchandise on account from Botham Company for $23,000, terms 2/10, net/30, FOB shipping point.
2. On April 6, paid freight costs of $900 on merchandise purchased from Botham.
3. On April 7, purchased equipment on account for $26,000.
4. On April 8, returned damaged merchandise to Botham Company and was granted a $3,000 credit for returned merchandise.
5. On April 15, paid the amount due to Botham Company in full.
Prepare the journal entries to record these transactions on the books of Harwick Co. under a perpetual inventory system.
Explanation
April 15 Accounts Payable = ($23,000 – $3,000) = $20,000
Inventory = [($23,000 – $3,000) x 2%] = $400
Cash = ($20,000 – $400) = $19,600
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