Question

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

(a)On July 1, (1) Crane purchased $89,000 of inventory, terms 3/10, n/30, FOB shipping point. (2) Crane paid freight costs of $1,178.

(b)On July 3, Crane returned damaged goods and received credit of $8,900.

(c)On July 10, Crane paid for the goods.

Prepare all necessary journal entries for Crane. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)

No. Date Account Titles and Explanation Debit Credit

(a) (1)

choose a transaction date

July 1July 3July 10

enter an account title enter a debit amount enter a credit amount

enter an account title enter a debit amount enter a credit amount

(a) (2)

choose a transaction date

July 1July 3July 10

enter an account title enter a debit amount enter a credit amount

enter an account title enter a debit amount enter a credit amount

(b)

choose a transaction date

July 1July 3July 10

enter an account title enter a debit amount enter a credit amount

enter an account title enter a debit amount enter a credit amount

(c)

choose a transaction date

July 1July 3July 10

enter an account title enter a debit amount enter a credit amount

enter an account title enter a debit amount enter a credit amount

enter an account title enter a debit amount enter a credit amount

Answer 1

Credit No. (a) (1) Debit 89,000 $ $ 89,000 (a) (2) $ 1,178 $ 1,178 Date Account Titles and Explanation July.1 Purchases Accounts Payable July.1 Freight-in Cash July.3 Accounts Payable Purchase Returns and Allowances July.10 Accounts Payable Cash Purchase Discounts (b) $ 8,900 $ 8,900 (c) $ 80,100 $ $ 77,697 2,403 Working Notes: July.10 Accounts Payable = $89,000-$8,900 = $80,100 Purchase Discount = $80,100*3% = $2,403 Cash = $80,100-$2,403 = $77,697