Question

On June 10, Pais Company purchased $9,000 of merchandise from MacGyver Company, on account, terms 3/10, n/30. Pais pays the freight costs of $400 on June 11. Goods totaling $600 are returned to MacGyver for credit on June 12. On June 19, Pais Company pays McGiver Company in full, less the purchase discount. Both companies use a perpetual inventory system. Journalize perpetual inventory entries. Instructions a. Prepare separate entries for each transaction on the books of Pais Company. b. Prepare separate entries for each transaction for MacGyver Company. The merchandise purchased by Pais on June 10 cost MacGyver $5,000, and the goods returned cost McGiver $310.

Answer 1

Solution :

Pais Company

June 10   Inventory                                  9000

              Accounts payable                                              9000

June 11   Inventory                                   400

               Cash                                                                   400

              No entry                                     0

June 12   Accounts payable                    600

                 Inventory                                                       600

June 19    Accounts payable                 8400

              Inventory                                                          252           = 8400 x 3%

              Cash                                                                 8148

McGiver Company

June 10    Accounts Receivable           9000

                Sales revenue                                            9000

               Cost of goods sold                5000

                Inventory                                                   5000

June 12    Sales return and allowances  600

                 Accounts receivable                               600

                 Inventory                                310

                Cost of goods                                           310

June 19    Cash                                      8148

                  Sales discount                     252                                =8400 x 3%

                Account receivable                                   8400