Question

Purchase-Related Transactions
Stylon Co., a women's clothing store,
purchased $48,000 of merchandise from a supplier on account, terms FOB destination, 2/10, n/30, using the net method under a perpetual inventory system. Stylon returned merchandise with an invoice amount of $7,500, receiving a credit memo.a. Journalize Stylon's entry to record the purchase. If an amount box does not require an entry, leave it blank.






b. Journalize Stylon's entry to record the merchandise return. If an amount box does not require an entry, leave it blank.






c. Journalize Stylon's entry to record the payment within the discount period of 10 days. If an amount box does not require an entry, leave it blank.






d. Journalize Stylon's entry to record the payment beyond the discount period of 10 days. If an amount box does not require an entry, leave it blank.

Answer 1

Answer:

A.

Dr merchandise inventory 47,040

Cr Account payable 47,040

B.

Dr Account payable 7,350

Cr merchandise inventory 7,350

C.

Dr Account payable 39,690

Cr Cash 39,690

D.

Dr Account payable 39,690

Dr Purchase discount 810

Cr cash 40,500

Explanation:

Stylon Co. Journal entry

A.

Dr merchandise inventory 47,040

Cr Account payable 47,040

(48,000-(48,000×2%)

B.

Dr Account payable 7,350

Cr merchandise inventory 7,350

(7500-(7500×2%)

C.

Dr Account payable 39,690

Cr Cash 39,690

(47,040-7,350)

D.

Dr Account payable 39,690

Dr Purchase discount 810

(48000-7500)×2%

Cr cash 40,500

Answer 2

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.