Question

NewTech Medical Devices is a medical devices wholesaler that commenced business on June 1, 2019. NewTech Medical Devices purchases merchandise for cash and on open account. In June 2019, NewTech Medical Devices engaged in the following purchasing and cash payment activities:

DATE TRANSACTIONS 2019

June 1 Issued Check 101 to purchase merchandise, $3,200.

3 Purchased merchandise for $1,850 from BioCenter Inc., Invoice 606; terms 2/10, n/30.

5 Purchased merchandise for $4,550, plus a freight charge of $110, from New Concepts Corporation, Invoice 1011, terms 2/10, n/30.

9 Paid amount due to BioCenter Inc. for purchase of June 3, less discount, Check 102.

10 Received Credit Memorandum 227 from New Concepts Corporation for damaged merchandise totaling $150 that was returned; the goods were purchased on Invoice 1011, dated June 5.

11 Purchased merchandise for $1,550 from BioCenter Inc., Invoice 612; terms 2/10, n/30.

14 Paid amount due to New Concepts Corporation for Invoice 1011 of June 5, less the return of June 10 and less the cash discount, Check 103.

15 Purchased merchandise with a list price of $7,900 and trade discounts of 20 percent and 15 percent from Park Research, Invoice 1029, terms n/30.

20 Issued Check 104 to purchase merchandise, $1,700.

25 Returned merchandise purchased on June 20 as defective, receiving a cash refund of $210.

30 Purchased merchandise for $1900, plus a freight charge of $72, from New Concepts Corporation, Invoice 1080; terms 2/10, n/30.

INSTRUCTIONS Journalize the transactions in a general journal.

Analyze: What was the amount of trade discounts received on the June 15 purchase from Park Research?

Answer 1

Solution:

2019

June 1

Purchases ……………………….. 3,200

                      Cash ………………………….. 3,200

Purchased merchandise, check 101

June 3

Purchases …………….. 1,850

                    Accounts payable/Bio Center Inc. …………. 1,850

Purchased merchandise on account, Invoice 606, terms 2/10, n/30

June 5

Purchases ………………… 4,550

Freight In …………………. 110

                 Accounts payable/New Concepts Corporation …………… 4,660

Purchased merchandise on account, invoice 1011, terms 2/10, n/30

June 9

Accounts payable/Bio Center Inc. ……………….. 1,850

               Purchases discount ………………………………………… 37 (1,850 x 2%)

               Cash …………………………………………………………………… 1,813

Paid amount due to invoice 606, check 102

June 10

Accounts payable/New concepts corporation …………………..150

                              Purchases returns and allowances ……………………………..150

Received credit memorandum 227 for return of damaged merchandise

June 11

Purchases ………………………… 1550

                        Accounts payable/Bio Center Inc…………………. 1,550

Purchased merchandise on account Invoice 612 terms 2/10, n/30

June 14

Accounts payable/New concepts corporation …………………..4,510

                          Purchases discounts ……………………………………………………..88 (4,400 x 2%)

                          Cash ……………………………………………………………………………..4,422

Paid amount owed on Invoice 1011, check 103

June 15

Purchases ……………………….5,372

            Accounts payable/Park Research …………………….5,372

7,900 x (1 – 0.20) = 6320, 6320 x (1 – 0.15) = 5372

Purchased merchandise on account, Invoice 1029, n/30

June 20

Purchases ……………………….. 1,700

              Cash ……………………………… 1,700

Purchased merchandise check 104

June 25

Cash …………………….. 210

                 Purchases returns and allowances ………….210

Received cash for return of defective merchandise purchased june 20

June 30

Purchases …………………… 1900

Freight in …………………….. 72

                 Accounts payable/New Concepts corporation ………….. 1972

Purchased merchandise on account, invoice 1080 terms 2/10, n/30

Analyze: The amount of trade discounts received on the June 15 purchase from Park Research was $2,528 (List price, $7,900, less purchase price, $5,372).