Prepare journal entries to record the following transactions for a retail store: March 2 Purchased merchandise from Alfa Company under the following terms: $1,800 invoice price, 2/15, n/60, FOB factory. 3 Paid $125 for shipping charges on the purchase of March 2. 4 Returned to Alfa Company unacceptable merchandise that had an invoice price of $300. 17 Sent a cheque to Alfa Company for the March 2 purchase, net of the discount and the returned merchandise.
Prepare
March 2 Purchased merchandise from Alfa Company under the following terms:
$1,800 invoice price, 2/15, n/60, FOB factory.
3 Paid $125 for shipping charges on the purchase of March 2.
4 Returned to Alfa Company unacceptable merchandise that had an invoice
price of $300.
17 Sent a cheque to Alfa Company for the March 2 purchase, net of the discount and the returned merchandise.
270 Chapter 5
EXERCISES
Exercise 5–1
Merchandising terms
(LO 1, 2)
abc
Purchases . . . . . . . . . . . . . . . . . . . . . $45,000 $80,000 $61,000
Purchases discounts . . . . . . . . . . . . . 2,000 ? 1,300
Purchases returns and allowances . . . . 1,500 3,000 2,200
Transportation-in . . . . . . . . . . . . . . . ? 7,000 8,000
Beginning inventory . . . . . . . . . . . . . 3,500 ? 18,000
Cost of goods purchased . . . . . . . . . . 44,700 79,000 ?
Ending inventory . . . . . . . . . . . . . . . 2,200 15,000 ?
Cost of goods sold . . . . . . . . . . . . . . ? 83,200 68,260
Exercise 5–2
Calculating cost of
goods sold
(LO 2)
Exercise 5–3
Recording journal
entries for merchandise
transactions
(LO 2)
7901n_c05_237-289 12/6/99 10:31 AM Page 270
7901n Irwin
Larson Page 271
Accounting for Merchandising Activities 271
March 18 Purchased merchandise from Bravo Company under the following terms:
$2,500 invoice price, 2/10, n/30, FOB destination.
21 After brief negotiations, received a credit memorandum from Bravo Company granting a $700 allowance on the purchase of March 18.
28 Sent a cheque to Bravo Company paying for the March 18 purchase, net of
the discount and the allowance.
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