Question

On June 10, Wildhorse Co. purchased $ 6,700 of merchandise on account from Bridgeport Company, FOB shipping point, terms 1/10, n/30. Wildhorse Co. pays the freight costs of $ 510 on June 11. Damaged goods totaling $500 are returned to Bridgeport for credit on June 12. The fair value of these goods is $ 80. On June 19, Wildhorse Co. pays Bridgeport Company in full, less the purchase discount. Both companies use a perpetual inventory system. Prepare separate entries for each transaction for Bridgeport Company. The merchandise purchased by Wildhorse Co. on June 10 had cost Bridgeport $ 5,100.

Answer 1

Bridgeport Company would make various journal entries to record the transactions with Wildhorse Co.

Step-by-step explanation:

Bridgeport Company would make the following entries for each transaction:

1. June 10: Debit Accounts Receivable $6,700, Credit Sales $6,700
2. June 11: Debit Freight Costs $510, Credit Accounts Payable $510
3. June 12: Debit Sales Returns and Allowances $500, Credit Accounts Receivable $500
4. June 12: Debit Inventory $420 ([$500 - $80]), Credit Cost of Goods Sold $420, Debit Sales Returns and Allowances $80, Credit Inventory $80
5. June 19: Debit Accounts Payable $6,410 ([$6,700 - $290]), Credit Cash $6,410
6. June 19: Debit Accounts Payable $290, Credit Purchase Discounts Lost $290