Question

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

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.