Question

Information related to Whispering Winds Corp. is presented below.

1. On April 5, purchased merchandise on account from Martinez Company for $34,800, terms 2/10, net/30, FOB shipping point.
2. On April 6, paid freight costs of $790 on merchandise purchased from Martinez.
3. On April 7, purchased equipment on account for $28,200.
4. On April 8, returned damaged merchandise to Martinez Company and was granted a $5,500 credit for returned merchandise.
5. On April 15, paid the amount due to Martinez Company in full.
Prepare the journal entries to record these transactions on the books of Harwick Co. under a perpetual inventory system.

Answer 1

Harwick Co Entries

DATE ACCOUNT TITLE & EXPLANATION DEBIT CREDIT

$ $

5 Apr. Merchandise Inventory 34,800

Account Payable 34,800

(To record purchase of inventory on account)

6 Apr. Freight In 790

Cash 790

(To record freight cost incurred Purchase of merchandise)

7 Apr. Equipment 28,200

Account Payable 28,200

(To record purchase of equipment on account)

8 Apr. Account Payable 5,500

Merchandise Inventory 5,500

(To record return of damaged merchandise)

15 Apr. Account Payables 34,800

Cash (34,800-5,500) 29,300

(To record payment made)