Question

Brief Exercise 5-05

Prepare the journal entries to record the following transactions on Wildhorse Company’s books using 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. Record journal entries in the order presented in the problem.)

(a)		On March 2, Windsor Company sold $947,600 of merchandise to Wildhorse Company on account, terms 3/10, n/30. The cost of the merchandise sold was $534,200.
(b)		On March 6, Wildhorse Company returned $105,700 of the merchandise purchased on March 2. The cost of the merchandise returned was $68,600.
(c)		On March 12, Windsor Company received the balance due from Wildhorse Company.

No.	Date	Account Titles and Explanation	Debit	Credit
(a)	choose a transaction date March 2March 6March 12	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)	choose a transaction date March 2March 6March 12	enter an account title	enter a debit amount	enter a credit amount
		enter an account title	enter a debit amount	enter a credit amount
(c)	choose a transaction date March 2March 6March 12	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

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Answer 1

Answer:

Date	Description	Debit ($)	Credit ($)
Mar 2	Merchandise Inventory	$947,600
	Accounts Payable (Windsor Co.)		$947,600
.	.	.	.
Mar 6	Accounts Payable (Windsor Co.)	$105,700
	Merchandise Inventory		$105,700
Mar 12	Accounts Payable (Windsor Co.)	$841,900
	Merchandise Inventory		$25,257
	Cash		$816,643

Calculations:

For Mar 12 entry Total Payment due to Windsor = $947,600 - $105,700 = $841,900

Cash Discount = 3% × $841,900 = $25,257

Hence, cash to be paid = $841,900- $25,257 = $816,643

.

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