Question

Prepare journal entries to record the following transactions for a retail store. The company uses a perpetual inventory system and the gross method.
  

Apr.		2		Purchased $4,100 of merchandise from Lyon Company with credit terms of 2/15, n/60, invoice dated April 2, and FOB shipping point.
		3		Paid $210 cash for shipping charges on the April 2 purchase.
		4		Returned to Lyon Company unacceptable merchandise that had an invoice price of $600.
		17		Sent a check to Lyon Company for the April 2 purchase, net of the discount and the returned merchandise.
		18		Purchased $7,500 of merchandise from Frist Corp. with credit terms of 1/10, n/30, invoice dated April 18, and FOB destination.
		21		After negotiations, received from Frist a $600 allowance toward the $7,500 owed on the April 18 purchase.
		28		Sent check to Frist paying for the April 18 purchase, net of the allowance and the discount.

Answer 1

SOLUTION:

Date	Particulars	Debit	Credit
Apr-02	Merchandise inventory	4,100
	Accounts payable— Lyon		4,100
Apr-03	Merchandise inventory	210
	Cash		210
Apr-04	Accounts payable—Lyon	600
	Merchandise inventory		600
Apr-17	Accounts payable—Lyon	3,500
	Merchandise inventory		70
	Cash		3,430
Apr-18	Merchandise inventory	7,500
	Accounts payable— Frist		7,500
Apr-21	Accounts payable—Frist	600
	Merchandise inventory		600
Apr-28	Accounts payable—Frist	6,900
	Merchandise inventory		69
	Cash		6,831