Question

Exercise 8.12 Recording purchases with purchase returns and purchases discounts. LO 8-7 Record the following transactions of J. Min Designs in a general journal. The company uses the perpetual inventory system. DATE TRANSACTIONS 2019 April 1 Purchased merchandise on credit from O’Rourke Fabricators, Invoice 885, $3,850, terms 2/10, n/30; freight of $105 prepaid by O’Rourke Fabricators and added to the invoice (total invoice amount, $3,955). 9 Paid amount due to O’Rourke Fabricators for the purchase of April 1, less the 2 percent discount, Check 457. 15 Purchased merchandise on credit from Kroll Company, Invoice 145, $2,100, terms 1/10, n/30; freight of $160 prepaid by Kroll and added to the invoice. 17 Returned damaged merchandise purchased on April 15 from Kroll Company; received Credit Memorandum 332 for $135. 24 Paid the amount due to Kroll Company for the purchase of April 15, less the return on April 17, taking the 1 percent discount, Check 470. Record these transactions in a general journal. (Round final answers to the nearest whole dollar value.)

Answer 1

The Journal entries are as follows:

(i) On Apr-01,

Purchases A/c Dr. $3,850

Freight - In A/c Dr. $105

To Accounts Payable - O’Rourke Fabricators $3,955

(To record Purchased merchandise on account,Invoice 885, 3/10, n/30)

(ii) On Apr-09,

Accounts Payable - O’Rourke Fabricators A/c Dr. $3,955

To Purchase discount (3,850 x 2%) $77

To Cash $3,878

(To Record Paid amount due on Invoice 885, Check 457)

(iii) On Apr-15,

Purchases A/c Dr. $2,100

Freight - In A/c Dr. $160

To Accounts Payable - Kroll Company $2,260

(To record purchased merchandise on account,Invoice 885, 3/10, n/30)

(iv) On Apr-17,

Accounts Payable - Kroll Company A/c Dr. $135

To Purchases Returns and Allowances $135

(To record received Credit Memo 332 for return of damaged merchandise)

(v) On Apr-24,

Accounts Payable - Kroll Company A/c Dr. $2,125

To Purchase discount [(2,100 - 135 ) x 1%] $19.65

To cash $2,105.35

(To record paid amount due on Invoice 145, Check 470)