Question

Roley Corporation uses a periodic inventory system and the gross method of accounting for purchase discounts.

A. On July 1, Roley purchased $60,000 of inventory, terms 2/10, n/30, FOB shipping point. Roley paid freight costs of $1,200.
B. On July 3, Roley returned damaged goods and received credit of $6,000.
C. On July 10, Roley paid for the goods.
Prepare all necessary journal entries for Roley.

Answer 1

Answer:Please see answers in explanation column

Step-by-step explanation:

1A)To record amount payable for purchase of goods

Date Account Title Debit Credit

July 1 Purchase $60,000

Accounts Payable $60,000

Freight in $1,200

Cash $1,200

B)To record amount on damaged goods

Date Account Title Debit Credit

July 3 Accounts Payable $6,000

Return of Purchase $6,000

C)Journal to record payment of goods

Date Account Title Debit Credit

July 10 Accounts Payable $54,000

Purchase Discount $1,080

Cash $52,920

Calculations

Accounts payable Purchased Price - price of returned goods = 60000-6000 = $54,000

Discount on Purchases if paid within 10 days = 2% x $54,000 = $1,080