Question

Information related to Whispering Winds Corp. is presented below.
1. On April 5, purchased merchandise on account from Martinez Company for $34,800, terms 2/10, net/30, FOB shipping point.
2. On April 6, paid freight costs of $790 on merchandise purchased from Martinez.
3. On April 7, purchased equipment on account for $28,200.
4. On April 8, returned damaged merchandise to Martinez Company and was granted a $5,500 credit for returned merchandise.
5. On April 15, paid the amount due to Martinez Company in full.
Prepare the journal entries to record these transactions on the books of Harwick Co. under a perpetual inventory system.

Answer 1

Answer:

                                          Harwick Co Entries

DATE       ACCOUNT TITLE & EXPLANATION        DEBIT       CREDIT

                                                                                       $                $

5 Apr.            Merchandise Inventory                       34,800

                      Account Payable                                                   34,800

                      (To record purchase of inventory on account)

6 Apr.             Freight In                                                790

                      Cash                                                                          790

                      (To record freight cost incurred Purchase of merchandise)

7 Apr.             Equipment                                              28,200

                      Account Payable                                                     28,200

                      (To record purchase of equipment on account)

8 Apr.               Account Payable                                   5,500

                      Merchandise Inventory                                             5,500

                      (To record return of damaged merchandise)

15 Apr.             Account Payables                                  34,800

                        Cash (34,800-5,500)                                                29,300

                      (To record payment made)