Question

This information relates to Cullumber Co..1.On April 5, purchased merchandise from Oriole Company for $27,900, terms 2/10, n/30.2.On April 6, paid freight costs of $670 on merchandise purchased from Oriole Company.3.On April 7, purchased equipment on account for $31,600.4.On April 8, returned $3,700 of April 5 merchandise to Oriole Company.5.On April 15, paid the amount due to Oriole Company in full.(a)Prepare the journal entries to record the transactions listed above on Cullumber Co.’s books. Cullumber Co. uses a perpetual inventory system. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)

Answer 1

Journal entries are provided for Cullumber Co. starting with the purchase of merchandise on April 5th, then freight payments, equipment purchase, a merchandise return, and the full payment to Oriole Company on April 15th, taking into account the early payment discount.

Step-by-step explanation:

Journal Entries for Cullumber Co.

1. April 5 - Purchase of Merchandise:
Merchandise Inventory 27,900
Accounts Payable 27,900
(To record purchase of merchandise on account, terms 2/10, n/30)

2. April 6 - Payment of Freight Costs:
Merchandise Inventory 670
Cash 670
(To record payment of freight on merchandise purchased)

3. April 7 - Purchase of Equipment:
Equipment 31,600
Accounts Payable 31,600
(To record purchase of equipment on account)

4. April 8 - Return of Merchandise:
Accounts Payable 3,700
Merchandise Inventory 3,700
(To record return of merchandise to Oriole Company)

5. April 15 - Payment to Oriole Company:
Accounts Payable 24,200
Cash 23,716
Merchandise Inventory 484
(To record payment to Oriole Company, taking advantage of discount: 27,900 - 3,700 = 24,200; 2% discount on 24,200 is 484)

Answer 2

Step-by-step explanation:

The journal entries are shown below:

On April 5

Merchandise Inventory A/c $27,900

To Accounts payable A/c $27,900

(Being merchandise purchased on credit)

On April 6

Merchandise inventory A/c Dr $670

To Cash A/c $670

(Being freight is paid by cash)

On April 7

Equipment A/c Dr $31,600

To Accounts payable A/c $31,600

(Being equipment is purchased on credit)

On April 8

Accounts payable A/c $3,700

To Merchandise inventory A/c Dr $3,700

(Being the returned goods is recorded)

On April 15

Accounts payable A/c Dr $24,200 ($27,900 - $3,700)

To Cash A/c $23,716

To Merchandise Inventory A/c $484 ($24,200 × 2%)

(Being due amount is paid and the remaining balance is credited to the cash account)