Question

Information related to Windsor, Inc. is presented below.

1. On April 5, purchased merchandise on account from Pina Colada Company for $27,900, terms 4/10, net/30, FOB shipping point.
2. On April 6, paid freight costs of $700 on merchandise purchased from Pina Colada.
3. On April 7, purchased equipment on account for $28,800.
4. On April 8, returned $3,900 of merchandise to Pina Colada Company.
5. On April 15, paid the amount due to Pina Colada Company in full.

Required:
a. Prepare the journal entries to record these transactions on the books of Windsor, Inc. under a perpetual inventory system.
b. Prepare the journal entries to record these transactions on the books of Windsor, Inc. under a perpetual inventory system.

Answer 1

April 5

Dr Inventory $27,900

Cr Accounts Payable $27,900

April 6

Dr Inventory $700

Cr Cash $700

April 7

Dr Equipment $28,800,

Cr Accounts Payable $28,800

On April 8

Dr Accounts Payable $3,900

Cr Inventory $3,900

On April 15

Dr Accounts Payable (Inventory before discounts) $24,000

Cr Cash (Inventory after discounts) $23,040

Cr Inventory (discounts) $960

Step-by-step explanation:

Preparation of the journal entries to record these transactions on the books of Windsor, Inc. under a perpetual inventory system.

April 5

Dr Inventory $27,900

Cr Accounts Payable $27,900

April 6

Dr Inventory $700

Cr Cash $700

April 7

Dr Equipment $28,800,

Cr Accounts Payable $28,800

On April 8

Dr Accounts Payable $3,900

Cr Inventory $3,900

On April 15

Dr Accounts Payable (Inventory before discounts) $24,000

($27,900 - $3,900 = $24,000)

Cr Cash (Inventory after discounts) $23,040

($24,000-$960)

Cr Inventory (discounts) $960

($24,000 * 0.04 = $960)