Question

On March 1, Poff’s Co., a women’s clothing store, purchased $73,600 of merchandise from a supplier on account, terms FOB destination, 2/10, n/30. On March 5, Poff’s returned $8,700 of the merchandise, receiving a credit memo, and then paid the amount due on March 9, within the discount period.

Journalize Poff’s entries to record (a) the purchase, (b) the merchandise return, and (c) the payment. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered.

Answer 1

To journalize the entries for Poff's Co., you would debit Merchandise Inventory and Accounts Payable for the purchase, debit Accounts Payable and credit Merchandise Inventory for the merchandise return, and debit Accounts Payable, debit Cash, credit Merchandise Inventory, and credit Purchase Discounts for the payment.

Step-by-step explanation:

To journalize the entries for Poff's Co., we need to follow the given information:

a) The purchase entry:
Debit: Merchandise Inventory $73,600
Credit: Accounts Payable $73,600

b) The merchandise return entry:
Debit: Accounts Payable $8,700
Credit: Merchandise Inventory $8,700

c) The payment entry:
Debit: Accounts Payable $64,110
Debit: Cash $9,470 (73,600 - 8,700 x 0.02)
Credit: Merchandise Inventory $73,600
Credit: Purchase Discounts $1,470 (73,600 x 0.02)

Answer 2

The journal entry to record the purchase is: Debit Merchandise Inventory $72,128, Credit Accounts Payable $72,128.

The journal entry to record the merchandise return is: Debit Accounts Payable $8,526, Credit Merchandise Inventory $8,526

The journal entry to record the payment is: Debit Accounts Payable $63,602, Credit Cash $63,602.

a. Account titles and explanation DR CR

Merchandise Inventory $72,128.

(73600*0.02)

Accounts Payable $72,128.

To record the purchase

b. Account titles and explanation DR CR

Accounts Payable $8,526

(8700-(8700*0.02))

Merchandise Inventory $8,526

To record the merchandise return

c. Account titles and explanation DR CR

Accounts Payable $$63,602

(72128-8526)

Cash $63,602

To record the payment