Question

# 19) Journalize the following purchase transactions for Rocky's Swimming Pool Supply Company using the periodic inventory...

19) Journalize the following purchase transactions for Rocky's Swimming Pool Supply Company using the periodic inventory system. Explanations are not required. May 2 Purchased \$5,280 of merchandise inventory on account under terms 3/10, n/30 and FOB shipping point. May 6 Returned \$675 of defective merchandise purchased on May 2. May 8 Paid freight bill of \$120 on May 2 purchase. May 12 Paid amount owed on credit purchase on May 2.

• All working forms part of the answer
• All Journal Entries, following Periodic Inventory System:
 Date Accounts Title Debit Credit May-02 Purchases \$                          5,280.00 Accounts payable \$                                 5,280.00 May-06 Accounts payable \$                              675.00 Purchase return \$                                     675.00 May-08 Freight in \$                              120.00 Cash \$                                     120.00 May-12 Accounts payable \$                          4,605.00 Purchase discount \$                                     138.15 Cash \$                                 4,466.85

• Working for Journal Entry on May 12

Since payment is made on 10th day, which is within the term of payment for purchase discount ( term 3/10), discount of 3% will be received.

Amount due to be paid on May 12:
Purchases on account = \$5280
Less: purchase return = \$ 675
= 5280 – 675 = \$ 4,605

Purchase discount = \$ 4,605 x 3% = \$ 138.15

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