Question

Bit Coin Products had the following transactions listed below. Omit explanations. March 3 6 7 12 13 14 23 Purchased $3,200 of merchandise on credit, terms 2/10, n/60. Returned $400 of the goods purchased on June 3. Paid freight charges of $280 on goods purchased on June 3. Paid for the goods purchased on June 3. Sold goods on credit to Petty Shrew for $4,000, terms 1/10, n/30. The goods had cost $1,800 Petty Shrew returned $400 of the goods for full credit. Received payment from Petty Shrew in full. REQUIRED: In the books of the company record the necessary journal entries, assuming use of the periodic inventory system.

Answer 1

Date	Account Title	Debit	Credit
Mar 3	Merchandise Inventory	$3,200
	Accounts Payable		$3,200
	(To record purchase of inventory)
Mar 6	Accounts Payable	$400
	Merchandise Inventory		$400
	(To record purchase return of inventory)
Mar 7	Merchandise Inventory	$280
	Cash		$280
	(To record freight charges)
Mar 12	Accounts Payable	$2800
	Merchandise Inventory [$2800 x 2%]		$56
	Cash		$2,744
	(To record payment to merchandise vendor)
Mar 13	Account Receivable	$4,000
	Sales		$4,000
	(To record sale of merchandise)
Mar 13	Cost of Good Sold	$1,800
	Merchandise Inventory		$1,800
	(To record cost of good sold)
Mar 14	Sales	$400
	Account Receivable		$400
	(To record sales return of merchandise)
Mar 23	Cash	$1188
	Discount on sales [$1200 x 1%]	$12
	Account Receivable		$1,200
Note :
(i)	Freight charges paid on merchandise inventory will be considered as cost of merchandise purchase
(ii)	Dicount on purchase will reduce the merchndise inventory
(iii)	"Credit term of 2/10, n/60" means that payment is be done in 60 days and if made within 10 days then 2% discount will be received
(iv)	"Credit term of 1/10, n/30" means that payment is be done in 30 days and if made within 10 days then 1% discount will be given