Question

Purchase-Related Transactions Warwick’s Co., a women's clothing store, purchased $26,000 of merchandise from a supplier on account, terms FOB destination, 1/10, n/30. Warwick’s returned $3,900 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. Merchandise Inventory 26,000 Accounts Payable 26,000 Feedback a. A purchase increases Merchandise Inventory and Accounts Payable. b. Journalize Warwick’s Co.'s entry to record the merchandise return. Accounts Payable 3,900 Merchandise Inventory 3,900 Feedback b. A return reduces Merchandise Inventory and Accounts Payable in the purchaser's records. c. Journalize Warwick’s Co.'s entry to record the payment.

Purchase-Related Transactions

Warwick’s Co., a women's clothing store, purchased $26,000 of merchandise from a supplier on account, terms FOB destination, 1/10, n/30. Warwick’s returned $3,900 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.

	Merchandise Inventory
	Accounts Payable

Feedback

a. A purchase increases Merchandise Inventory and Accounts Payable.

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

	Accounts Payable
	Merchandise Inventory

Feedback

b. A return reduces Merchandise Inventory and Accounts Payable in the purchaser's records.

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

	Accounts Payable
	Cash

Answer 1

a	Journalize Warwick’s Co.'s entry to record the purchase
	Merchandise Inventory	26000
	To Accounts Payable		26000
	A purchase increases Merchandise Inventory and Accounts Payable.
b	Accounts Payable	3900
	To Merchandise Inventory		3900
	A return reduces Merchandise Inventory and Accounts Payable in the purchaser's records.
c	Journalize Warwick’s Co.'s entry to record the payment.
	Accounts Payable	22100
	To Cash		21879
	To Discount		221
	(26000-3900)*1%
	On payment accounts payable reduces and cash also reduces
	Since paid within 10 days discount of 1% is received