Reporting Purchase Transactions between Wholesale and Retail Merchandisers Using Perpetual Inventory Systems
the transactions listed below are typical of those involving New Books Inc. and Readers’ Corner. New Books is a wholesale merchandiser and Readers’ Corner is a retail merchandiser. Assume all sales of merchandise from New Books to Readers’ Corner are made with terms n/30, and the two companies use perpetual inventory systems. Assume the following transactions between the two companies occurred in the order listed during the year ended August 31.
Record the purchase of 585 on account
record the return of unsatisfactory merchandise for which credit was given
record payment in full?
Account Title | Debit | Credit | |||||
A | Inventory | 585,000 | |||||
Accounts Payable | 585000 | ||||||
B | Accounts Payable | 17,700 | Allowance=13500 | ||||
Inventory | 17,700 | Return of goods=4200 | |||||
(13500+4200) | |||||||
C | Accounts Payable | 567,300 | |||||
Cash | 567,300 | ||||||
(585000-17700) | |||||||
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