Question

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.

Answer 1

• 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 10^th 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