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 $5,600 of merchandise from Lyon Company with credit terms of 2/15, n/60, invoice dated April 2, and FOB shipping point.
		3		Paid $370 cash for shipping charges on the April 2 purchase.
		4		Returned to Lyon Company unacceptable merchandise that had an invoice price of $650.
		17		Sent a check to Lyon Company for the April 2 purchase, net of the discount and the returned merchandise.
		18		Purchased $10,500 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 $400 allowance toward the $10,500 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

Journal entries

Date	General Journal	Debit	Credit
Apr 2	Merchandise inventory	5600
	Account payable		5600
Apr 3	Merchandise inventory	370
	Cash		370
Apr 4	Account payable	650
	Merchandise inventory		650
Apr 17	Account payable (5600-650)	4950
	Cash (4950*98%)		4851
	Merchandise inventory		99
Apr 18	Merchandise inventory	10500
	Account payable		10500
Apr 21	Account payable	400
	Merchandise inventory		400
Apr 28	Account payable	10100
	Cash (10100*99%)		9999
	Merchandise inventory		101