Question

Problem (34 points) Treats, Inc. is a Chicago candy store that imports chocolate for International suppliers and sells those goods to Chicago consumers. For each of the followine transactions made the tournal entry or entries that Treats would make under PERPETUAL versus PERIODIC inventory system. There are extra rows in the tables. TREATS'S JOURNAL ENTRIES RELATED TO PURCHASING CHOCOLATE On Feb. 3. Treats ordered $100,000 worth of dark chocolate from a Belgian chocolatieron credit. The terms of the purchase were 2/10, 1/30. The chocolatier shipped the chocolate (FOB shipping point) to Treats on Feb. 4. The chocolate arrived on Feb. 5. That day, Treats paid Fedex $4,000 for the cost of shipping the chocolate Perpetual Journal Entries Periodic Journal Entries On Feb. 10, Treats returned $10,000 worth of the chocolate. Perpetual Journal Entries Periodic Journal Entries On Feb. 18, Treats paid the amount it owed related to this prior purchase. Perpetual Journal Entries Periodic Journal Entries

Answer 1

Answer:

On Feb.5:

Perpetual Journal Entries				Periodic Journal Entries
Inventory	$100,000			Purchases	$100,000
Accounts payable		$100,000		Accounts payable		$100,000
[To record purchase of inventory]				[To record purchase of inventory]
Inventory	$4,000			Freight-in	$4,000
Cash		$4,000		Cash		$4,000
[To record Cash paid for freight]				[To record Cash paid for freight]

On Feb 10:

Perpetual Journal Entries				Periodic Journal Entries
Accounts payable	$10,000			Accounts payable	$10,000
Inventory		$10,000		Purchase returns		$10,000
[To record purchase returns]				[To record purchase returns]

On Feb 18:

Perpetual Journal Entries				Periodic Journal Entries
Accounts payable [100,000-10,000]	$90,000			Accounts payable [100,000-10,000]	$90,000
Cash		$90,000		Cash		$90,000
[To record cash paid for accounts payable]				[To record cash paid for accounts payable]

Note: 2% purchase discount did not applied. Because cash paid after 10 days.