Question

On June 10, Cullumber Company purchased $8,400 of merchandise from Oriole Company, terms 3/10, n/30. Cullumber Company pays the freight costs of $380 on June 11. Goods totaling $500 are returned to Oriole Company for credit on June 12. On June 19, Cullumber Company pays Oriole Company in full, less the purchase discount. Both companies use a perpetual inventory system.

Answer 1

Step-by-step explanation:

June 10: DR inventory. Debit: $8,400. The inventory asset account will increase with the purchase.

CR Account payable. Credit: $8400.- Te AP liability will also increase

To record the purchase of inventory on account from Oriole Company

June 11: DR inventory. Debit: $380. Inventory will also increase with the cost of the freight in

CR Cash. Credit: $380.- The cash asset decreases wit te payment amount.

To record the payment to freight.

June 12: DR Accounts payable. Debit: $500. Teh liability decreases with the cost of the goods returned.

CR inventory: $500.- The inventory asset also decreases.

To recor inventory returned to oriole

June 19 DR Account PAyable. Debit: $1,900 The AP liability decrease with the gross payment amount ($8,400 - $500)

CR Inventory: $237.- The inventory asset decreases with the discount taken ($7,900 X 0.03)

CR Cash Credit: $7663 The cash asset decreases with the net payment amount

To record the payment to oriole company and the discount taken.