Question

Prepare journal entries to record the following transactions for a retail store. The company uses a perpetual inventory system and the gross method.
  

Apr.		2		Purchased $6,100 of merchandise from Lyon Company with credit terms of 2/15, n/60, invoice dated April 2, and FOB shipping point.
Apr.		3		Paid $280 cash for shipping charges on the April 2 purchase.
Apr.		4		Returned to Lyon Company unacceptable merchandise that had an invoice price of $650.
Apr.		17		Sent a check to Lyon Company for the April 2 purchase, net of the discount and the returned merchandise.
Apr.		18		Purchased $11,500 of merchandise from Frist Corp. with credit terms of 1/10, n/30, invoice dated April 18, and FOB destination.
Apr.		21		After negotiations, received from Frist a $600 allowance toward the $11,500 owed on the April 18 purchase.
Apr.		28		Sent check to Frist paying for the April 18 purchase, net of the allowance and the discount.

Answer 1

Date	General Journal	Debit	Credit
April 02	Merchandise inventory	6100
	Accounts payable-Lyon		6100
April 03	Merchandise inventory	280
	Cash		280
April 04	Accounts payable-Lyon	650
	Merchandise inventory		650
April 17	Accounts payable-Lyon	5450
	Merchandise inventory		109
	Cash		5341
April 18	Merchandise inventory	11500
	Accounts payable-First Corp.		11500
April 21	Accounts payable-First Corp.	600
	Merchandise inventory		600
April 28	Accounts payable-First Corp.	10900
	Merchandise inventory		109
	Cash		10791

Explanation:

Apr. 17: Cash paid within discount period less returns = [($6100 − $650) × (100% − 2%)] = $5341
Apr. 28: Cash paid balance within discount period = [($11500 − $600) × (100% − 1%)] = $10791