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The following are merchandising transactions of Wave Company, which applies the Periodic inventory system. July 3               Purchased...

The following are merchandising transactions of Wave Company, which applies the Periodic inventory system.

July 3               Purchased merchandise from CAP Company for RO. 15,000 under credit terms of 1/10, n/30, FOB destination.

July 4               At CAP’s request, Wave paid RO. 250 cash for freight charges on the July 3 purchase, reducing the amount owed to CAP.

July 7               Sold merchandise to Morris Company for RO. 10,500 under credit terms of 2/10, n/60, FOB destination. The merchandise had cost RO. 7,500.

July 10            Purchased merchandise from Dock Corporation for RO. 14,200 under credit terms of 1/10, n/45, FOB shipping point. The invoice showed that at Wave’s request, Dock paid the RO. 600 shipping charges and added that amount to the bill. (Hint: Discounts are not applied to freight and shipping charges).

July 11            Paid RO. 300 cash for shipping charges related to the July 7 sale to Morris Company.

July 12            Morris returned merchandise from the July 7 sale that had cost Wave RO. 1,250 and been sold for RO. 1,750. The merchandise was restored to inventory.

July 14             After negotiations with Dock Corporation concerning problems with the merchandise purchased on July 10, Wave received a credit memorandum from Dock granting a price reduction of RO. 2,000.

Instructions:

  1. Prepare the journal entries to record all the above transactions.                             

Solutions

Expert Solution

Date General Journal Debit Credit
July 3 Purchase       15,000
Accounts Payable       15,000
July 4 Freight-In           250
Cash           250
July 7 Accounts Receivable       10,500
Sales       10,500
July 10 Purchase       14,200
Freight-In           600
Accounts Payable       14,800
July 11 Freight-Out           300
Cash           300
July 12 Sales Return         1,750
Accounts Receivable         1,750
July 14 Accounts Payable         2,000
Purchase Discounts         2,000

ekkarill92 answered 2 years ago
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