Question

Merchandise is sold on account to a customer for $12,400, terms FOB shipping point, 1/10, n/30....

Merchandise is sold on account to a customer for $12,400, terms FOB shipping point, 1/10, n/30. The seller paid the freight of $370. Determine the following:

a. Journalize Warwick’s Co.'s entry to record the purchase.

Merchandise Inventory
Accounts Payable

b. Journalize Warwick’s Co.'s entry to record the merchandise return.

Accounts Payable
Merchandise Inventory

c. Journalize Warwick’s Co.'s entry to record the payment.

Accounts Payable
Cash
Business   Accounting   
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Homework Answers

Answer #1
Date Particulars Debit Credit
a.

Merchandise Inventory A/c Dr.

To Accounts Payable A/c

(Being Inventory sold)

$12,400

$12,400
b.

Accounts Payable A/c Dr.

To Merchandise Inventory A/c

(Being sales returned)

$7,800

$7,800
c.

Accounts Payable A/c Dr.

To Cash A/c

To Merchandise Inventory A/c

(Being cash received on account of sales)

$4,600

$4,554

$46

Note: As there is nothing mentioned about sales returns amount, it is randomly assumed as $7,800.

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