Question

Z-Mart had the following transactions for October 202x:             

Oct 6........ Purchased 650 units of inventory at $1 per unit; terms 2/10, n/30.

        8........ Returned 50 defective units and received full credit.

      10........ Paid the amount in full, less the returned items.

      11........ Sold 100 units to a customer for $1.75 each; terms 1/5, n20.

      16........ The customer from October 11^th paid the bill.

Required: Prepare journal entries to record each of the preceding transactions. Assume a perpetual inventory system.  Note: Round amounts to the nearest cent when applicable.

use the format below as a sample

GENERAL JOURNAL

Date		Account Titles and Explanation	PR	Debit	Credit

Answer 1

Answer)

Journal Entries

Date	Account Titles and Explanations	Debit	Credit
Oct'6	Inventory (650 units X $ 1 per unit)	$650
	Accounts Payable		$650
	(To record purchase of inventory)
Oct'8	Accounts Payable (50 units X $ 1 per unit)	$50
	Inventory		$50
	(To record purchase returns)
Oct'10	Account Payable	$600
	Cash		$588
	Inventory		$12
	(To record payment for inventory purchased on account)
Oct'11	Accounts Receivable (100 units X $ 1.75 per unit)	$175
	Sales		$175
	(To record sale of inventory on account)
Oct'11	Cost of goods sold (100 units X $ 1 per unit)	$100
	Inventory		$100
	(To record cost of inventory sold)
Oct'16	Cash	$173.25
	Sales Discount	$1.75
	Accounts Receivable		$175
	(To record collections for inventory sold on account

Working Note:

Calculation of Purchase discount

Purchase discount = (Purchases – Purchase returns) X 2%

                                   = ($ 650 - $ 50) X 2%

                                   = $ 12

Calculation of Sales discount

Purchase discount = Sales revenue X 1%

                                   = $ 175 X 1%

                                   = $ 1.75