Answer and Explanation:
To record the summarized transactions for Swank Imports using a periodic inventory system, the following journal entries can be made:
1. Purchases:
Purchases (Expense) $900,000
Accounts Payable (Liability) $900,000
This entry records the total purchases made on trade credit.
2. Purchases Returns and Allowances:
Accounts Payable (Liability) $40,000
Purchases Returns and Allowances (Expense) $40,000
This entry reflects the returns and allowances on purchases.
3. Freight In:
Freight In (Expense) $74,000
Cash (Asset) $74,000
This entry records the payment made in cash for freight charges.
4. Payment for Credit Purchases:
Accounts Payable (Liability) $882,000
Cash (Asset) $882,000
This entry represents the payment made for credit purchases after deducting returns, allowances, and cash discounts.
In summary, the journal entries for the summarized transactions are as follows:
1. Purchases:
Debit Purchases (Expense) for $900,000
Credit Accounts Payable (Liability) for $900,000
2. Purchases Returns and Allowances:
Debit Accounts Payable (Liability) for $40,000
Credit Purchases Returns and Allowances (Expense) for $40,000
3. Freight In:
Debit Freight In (Expense) for $74,000
Credit Cash (Asset) for $74,000
4. Payment for Credit Purchases:
Debit Accounts Payable (Liability) for $882,000
Credit Cash (Asset) for $882,000
These journal entries help in accurately recording the transactions and maintaining the appropriate balances in the relevant accounts for Swank Imports.