Question

Information related to Kerber Co. is presented below.1. On April 5, purchased merchandise from Wilkes Company for $23,000, terms 2/10, net/30, FOB shipping point.2. On April 6, paid freight costs of $900 on merchandise purchased from Wilkes.3. On April 7, purchased equipment on account for $26,000.4. On April 8, returned damaged merchandise to Wilkes Company and was granted a $3,000 credit for returned merchandise.5. On April 15, paid the amount due to Wilkes Company in full.Collapse question partPrepare the journal entries to record these transactions on the books of Kerber Co. under a perpetual inventory system. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)

Answer 1

Answer and Explanation:

The journal entries are as follows

1. On April 5

Merchandise Inventory $23,000

To Accounts Payable $23,000

(Being the merchandise purchased on the account is recorded)

For recording this we debited the merchandise inventory as it increased the assets and credited the account payable as it increased the liabilities

2. On April 6

Merchandise Inventory $900

To Cash $900

(Being freight cost is paid is recorded)

For recording this we debited the merchandise inventory as it increased the assets and credited the cash as it decreased the assets

3. On April 7

Equipment $26,000

To Accounts Payable $26,000

(Being equipment purchased on the account is recorded)

For recording this we debited the equipment as it increased the assets and credited the account payable as it increased the liabilities

4. On April 8

Accounts Payable $3,000

To Merchandise Inventory $3,000

(Being returned inventory is recorded)

For recording this we debited the account payable as it decreased the liabilities and credited the merchandise inventory as it decreased the assets

5. On April 15

Accounts Payable ($23,000 - $3,000) $20,000

To Cash $19,600

To Merchandise Inventory ($20,000 × 2%) $400

(Being payment is made is recorded)

For recording this we debited the account payable as it decreased the liabilities and credited the merchandise inventory and cash as it decreased the assets