Question

Exercise 5-02

This information relates to Windsor Co.

1.		On April 5, purchased merchandise from Wildhorse Company for $25,100, terms 2/10, n/30.
2.		On April 6, paid freight costs of $530 on merchandise purchased from Wildhorse.
3.		On April 7, purchased equipment on account for $32,500.
4.		On April 8, returned $3,600 of April 5 merchandise to Wildhorse Company.
5.		On April 15, paid the amount due to Wildhorse Company in full.

(a)

Prepare the journal entries to record the transactions listed above on Windsor Co.’s books. Windsor Co. uses a perpetual inventory system. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

No.	Date	Account Titles and Explanation	Debit	Credit
1.	choose a transaction date April 5April 6April 7April 8April 15May 4	enter an account title	enter a debit amount	enter a credit amount
		enter an account title	enter a debit amount	enter a credit amount
2.	choose a transaction date April 5April 6April 7April 8April 15May 4	enter an account title	enter a debit amount	enter a credit amount
		enter an account title	enter a debit amount	enter a credit amount
3.	choose a transaction date April 5April 6April 7April 8April 15May 4	enter an account title	enter a debit amount	enter a credit amount
		enter an account title	enter a debit amount	enter a credit amount
4.	choose a transaction date April 5April 6April 7April 8April 15May 4	enter an account title	enter a debit amount	enter a credit amount
		enter an account title	enter a debit amount	enter a credit amount
5.	choose a transaction date April 5April 6April 7April 8April 15May 4	enter an account title	enter a debit amount	enter a credit amount
		enter an account title	enter a debit amount	enter a credit amount
		enter an account title	enter a debit amount	enter a credit amount

(b)

Assume that Windsor Co. paid the balance due to Wildhorse Company on May 4 instead of April 15. Prepare the journal entry to record this payment. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date	Account Titles and Explanation	Debit	Credit
May 4	enter an account title	enter a debit amount	enter a credit amount
	enter an account title	enter a debit amount	enter a credit amount

Answer 1

a)

Journal

April 5	Merchandise inventory	25,100
	Accounts payable - Wildhorse Company		25,100
April 6	Merchandise inventory	530
	Cash		530
April 7	Equipment	32,500
	Accounts payable		32,500
April 8	Accounts payable - Wildhorse Company	3,600
	Merchandise inventory		3,600
April 15	Accounts payable - Wildhorse Company	21,500
	Merchandise inventory		430
	Cash		21,070

Final amount due = Cost of goods purchased - Cost of goods returned

= 25,100 - 3,600

= $21,500

Discount amount = Final amount due x Discount percentage

= 21,500 x 2/100

= $430

Cash payment to be made = Final amount due - Discount amount

= 21,500 - 430

= $21,070

b)

Journal

May 4	Accounts payable - Wildhorse Company	21,500
	Cash		21,500