Question

Roley Corporation uses a periodic inventory system and the gross method of accounting for purchase discounts.

(a) On July 1, (1) Roley purchased $60,000 of inventory, terms 2/10, n/30, FOB shipping point. (2) Roley paid freight costs of $1,200.
(b) On July 3, Roley returned damaged goods and received credit of $6,000.
(c) On July 10, Roley paid for the goods.
Prepare all necessary journal entries for Roley. (Round answers to 0 decimal places, e.g. 5,275. 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.)
No. Date Account Titles and Explanation Debit Credit
(a) (1) July 1 ________________________ ___________ _______________

_______________________ ____________ _______________
(a) (2) _____________________________ ____________ _______________

____________________________ _____________ _______________
(b) July 3 _________________________ _____________ _______________

_________________________ ______________ ________________
(c) July 10 ________________________ _______________ ________________

________________________ ______________ ___________________

________________________ _______________ ___________________

Answer 1

Step-by-step explanation:

The journal entries are shown below:

(A) Purchase A/c Dr $60,000

To Accounts Payable A/c $60,000

(Being inventory is purchased on credit basis)

(A) (2) Freight in Dr $1,200

To Cash A/c $1,200

(Being freight is paid for cash)

(B) Accounts Payable A/c Dr $6,000

To Purchase Return $6,000

(Being returned goods are recorded)

(C) Accounts Payable A/c Dr $54,000

To Purchase Return $1,080

To Cash A/c $52,920

(Being the cash is paid for cash)

The computation is shown below:

Accounts payable would be

= $60,000 - $6,000

= $54,000

And, the purchase return would be

= $54,000 × 2%

= $1,080

And, the remaining balance is credited to cash account