Question

Abe's Printing Supply Company uses a perpetual inventory system. The company had the following transactions during August 2019

Aug. 5: Purchased $2,900 Of merchandise on account: Freight and credit terms were FOB shipping point, 3/15, n/60.

Aug. 9: Paid transportation costs of $440 for t}u^s Aug. 5 purchase.

Aug. 10: Returned $600 of defective merchandise that had been purchased on Aug. 5.

Aug. 15: Paid for the merchandise purchased on Aug. 5.

Prepare journal entries for August 10 and 15. Omit explanations

Answer 1

Perpetual inventory system:

Journal Entries:

Date	Account title and Explanation	debit	Credit
Aug 5	Inventory	$2,900
	Accounts payable		$2,900
	[To record purchase of inventory on account]
Aug 9	Inventory	$440
	Cash		$440
	[To record payment of transportation cost]
Aug 10	Accounts payable	$600
	Inventory		$600
	[To record purchase returns]
Aug 15	Accounts payable [2900-600 returns]	$2,300
	Inventory [2,300 x 3%]		$69
	Cash		$2,231
	[To record cash paid for accounts payable]