Question

Prepare journal entries to record the following transactions for a retail store. The company uses a perpetual inventory system and the gross method. Apr. 2 Purchased $4,600 of merchandise from Lyon Company with credit terms of 2/15, n/60, invoice dated April 2, and FOB shipping point. 3 Paid $300 cash for shipping charges on the April 2 purchase. 4 Returned to Lyon Company unacceptable merchandise that had an invoice price of $600. 17 Sent a check to Lyon Company for the April 2 purchase, net of the discount and the returned merchandise. 18 Purchased $8,500 of merchandise from Frist Corp. with credit terms of 1/10, n/30, invoice dated April 18, and FOB destination. 21 After negotiations, received from Frist a $500 allowance toward the $8,500 owed on the April 18 purchase. 28 Sent check to Frist paying for the April 18 purchase, net of the allowance and the discount.

Answer 1

Date	Accounts titles and explanation	Debit	Credit
Apr. 2	Merchandise inventory	$4,600
	...Accounts Payable - Lyon Company		$4,600
	(To record the purchase of merchandise)
Apr. 3	Merchandise inventory	$300
	...Cash		$300
	(To record the payment of shipping charges)
Apr.4	Accounts Payable - Lyon Company	$600
	...Merchandise inventory		$600
	(To record the return of merchandise)
Apr. 17	Accounts payable - Lyon Company ($4,600 + $600)	$5,200
	...Merchandise Inventory ($5,200 * 2%)		$104
	...Cash		$5,096
	(To record the payment of merchandise)
Apr. 18	Merchandise Inventory	$8,500
	...Accounts Payable - Frist corp.		$8,500
	(To record the purchase of merchandise)
Apr. 21	Accounts Payable - Frist corp.	$500
	...Merchandise Inventory		$500
	(To record the allowance on merchandise)
Apr. 28	Accounts Payable - Frist corp. ($8,500 - $500)	$8,000
	...Merchandise Inventory ($8,000 * 1%)		$80
	...Cash		$7,920
	(To record the payment to Frist Corp.)