Question

Prepare the journal entries to record these transactions on Crane Company's books using a periodic 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 joumal entries in the order presented in the problem.)

(a) On March 2. Crane Company purchased $894,500 of merchandise from Larkspur Company, terms 3/10, n/30.
(b) On March 6, Crane Company returned $105,600 of the merchandise purchased on March 2.
(c) On March 12, Crane Company paid the balance due to Larkspur Company.

Answer 1

To record the transactions on Crane Company's books, the journal entries are as follows: (a) Debit Merchandise Inventory and Credit Accounts Payable for the purchase. (b) Debit Accounts Payable and Credit Merchandise Inventory for the return. (c) Debit Accounts Payable and Credit Cash for the payment.

Step-by-step explanation:

The journal entries to record the transactions on Crane Company's books using a periodic inventory system are as follows:

1. (a) On March 2, Crane Company purchased $894,500 of merchandise from Larkspur Company. The journal entry to record this transaction would be:

• Debit Merchandise Inventory for $894,500
• Credit Accounts Payable for $894,500

(b) On March 6, Crane Company returned $105,600 of the merchandise purchased on March 2. The journal entry to record this return would be:

• Debit Accounts Payable for $105,600
• Credit Merchandise Inventory for $105,600

(c) On March 12, Crane Company paid the balance due to Larkspur Company. The journal entry to record this payment would be:

• Debit Accounts Payable for $894,500
• Credit Cash for $894,500