Question

The following selected transaction were completed by gourmet company during January of the current year:

1: purchase merchandise from ALMIS Co..,$65,000, terms FOB destination, N/30
2: purchase merchandise from AlFA. Co., $78,500, terms FOB shipping point, 2/10, n/eom. prepaid freight of $650 was added to the invoice.
3: purchased merchandise from fogel Co., $91,000, terms FOB destination, 2/10, n/30
4: Issued debit memo to fogel Co. for $7,000 of merchandise returned from purchase on January 4.
5: paid AlFA Co. for invoice of January 3, less discount.
6: paid fogel Co. for invoice of January 4, less debit memo of January 6 and discount.
7: purchased merchandise from u I trust Co., $82,900, terms FOB shopping point, n/eom.
8: paid freight of $750 on January 19 purchase from unitrust Co.
9: purchase merchandise from Lenn Co., $10,000 terms FOB destination, 1/10, n/30.
10: paid lenny co. for invoice of January 20, less discount. 31 paid bearcat Co. for invoice of January 1. 31. paid unitrust Co. for invoice of January 19. lnstructions journalize the entries to record the transactions of gourmet company for January.
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Answer 1

January 1.

Merchandise $65,000 (debit)

Accounts Payable - ALMIS Co. $65,000 (credit)

January 2.

Merchandise $65,000 (debit)

Freight Charges Paid in Advance $650 (debit)

Accounts Payable - AlFA. Co. $65,000 (credit)

Cash $650 (credit)

January 3.

Merchandise $91,000 (debit)

Accounts Payable - fogel Co. $91,000 (credit)

January 4.

Accounts Payable - fogel Co. $7,000 (debit)

Merchandise $7,000 (credit)

January 5.

Accounts Payable - AlFA. Co. $65,000 (credit)

Discount Received $1,300 (credit)

Cash $63,700 (credit)

January 6.

Accounts Payable - fogel Co. $84,000 (credit)

Discount Received $1,600 (credit)

Cash $82,400 (credit)

January 7.

Merchandise $82,900 (debit)

Freight $750 (debit)

Accounts Payable - u I trust Co. $82,900 (credit)

Accounts Payable - Carrier Service Provider $750 (credit)

January 19

Accounts Payable - Carrier Service Provider $750 (debit)

Cash $750 (credit)

January 9

Merchandise $10,000 (debit)

Accounts Payable - Lenn Co. $10,000 (credit)

January 10

Accounts Payable - Lenn Co. $10,000 (credit)

Discount Received $100 (credit)

Cash $9,900 (credit)

January 31

Accounts Payable - u I trust Co. $82,900 (debit)

Cash $82,900 (credit)

Step-by-step explanation:

When Merchandise is Purchased on Account, Recognize the Assets of Merchandise and Recognize the Liability owing to the Supplier.

When Merchandise is finally paid for, De-recognize the Liability owing to the supplier (less discount applicable) and also De-recognize the Assets of Cash.