Question

Purchase-Related Transactions

Warwick’s Co., a women's clothing store, purchased $15,000 of merchandise from a supplier on account, terms FOB destination, 1/10, n/30. Warwick’s returned $2,300 of the merchandise, receiving a credit memo, and then paid the amount due within the discount period.

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

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

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

Answer 1

Solution:

Journal Entries
Date	Particulars	Debit	Credit
a.	Inventory	$15,000
	Accounts payable		$15,000
b.	Accounts payable	$2,300
	Inventory		$2,300
c.	Accounts Payable ($15000- $2300)	$12,700
	Inventory ($12700*1%)		$127
	Cash		$12,573