Complete Question:
Feb.2: Green buys $21,500 worth of inventory on account with credit terms of 1/15, n/60 FOB shipping point.
Feb.4: Green pays a $140 freight charge.
Feb.7: Green returns $5,600 of the merchandise due to damage during shipment.
Feb. 14: Green paid the amount due, less return and discount.
Journalize the purchase transactions. Explanations are not required. 2. In the final analysis, how much did the inventory cost Green?
Answer:
General Journal:
a) Feb. 2:
Debit Inventory Account $21,500
Credit Accounts Payable $21,500
To record the purchase of inventory on account, terms 1/15, n/60 FOB shipping point.
b) Feb.4:
Debit Freight-In Expense $140
Credit Cash Account $140
To record the payment of freight-in.
c) Feb.7:
Debit Accounts Payable $5,600
Credit Inventory $5,600
To record the return of damaged goods.
c) Feb. 14:
Debit Accounts Payable $15,900
Credit Cash Discount $159
Credit Cash Account $15,741
To record payment on account.
Explanation:
Journal entries are very useful in the initial recording of transactions into the accounting books. They show the accounts that will be debited and the other one that will be credited in the general ledger to comply with the double entry system of bookkeeping.
