Question

This information relates to Hans Olaf Pty Ltd.

1.	On 5 April purchased inventory from R. Ward and Company for $18 000, terms 2/7, n/30.
2.	On 6 April paid freight costs to Freight Masters of $900 on inventory purchased from R. Ward and Company.
3.	On 7 April purchased equipment on account for $26 000.
4.	On 8 April returned incorrect inventories to R. Ward & Company and was granted a $3 000 allowance.
5.	On 11 April paid the amount due to R. Ward & Company.

Prepare the journal entries to record the transactions listed above on the books of Hans Olaf Pty Ltd. Hans Olaf Pty Ltd uses a perpetual inventory system. (For multiple debit/credit entries, list accounts in order of magnitude.)

Answer 1

Apr-05	Purchases A/c             Dr.	18000
	To Accounts payable		18000
Apr-06	Frieght A/c                     Dr.	900
	To Cash		900
Apr-07	Equipment A/c                  Dr.	26000
	To Accounts payable		26000
Apr-08	Accounts Payable A/c      Dr.	3000
	To Purchase return and allowances		3000
Apr-11	Accounts Payable A/c      Dr. (18000-3000)	15000
	To Cash   (15000*.98)		14700
	To Purchase discount (15000*.02) Discount		300