Question

NewTech Medical Devices is a medical devices wholesaler that commenced business on June 1, 20X1. The company purchases merchandise for cash and on open account. In June 20X1, NewTech Medical Devices engaged in the following purchasing and cash payment activities:

DATE			TRANSACTIONS
20X1
June	1		Issued Check 101 to purchase merchandise, $4,500.
	3		Purchased merchandise for $1,700 from BioCenter Inc., Invoice 606; terms 2/10, n/30.
	5		Purchased merchandise for $5,850, plus a freight charge of $110, from New Concepts Corporation, Invoice 1011; terms 2/10, n/30.
	9		Paid amount due to BioCenter Inc. for purchase of June 3, less discount, Check 102.
	10		Received Credit Memorandum 227 from New Concepts Corporation for damaged merchandise totaling $150 that was returned; the goods were purchased on Invoice 1011, dated June 5.
	11		Purchased merchandise for $1,680 from BioCenter Inc., Invoice 612; terms 2/10, n/30.
	14		Paid amount due to New Concepts Corporation for Invoice 1011 of June 5, less the return of June 10 and less the cash discount, Check 103.
	15		Purchased merchandise with a list price of $9,200 and trade discounts of 20 percent and 15 percent from Park Research, Invoice 1029, terms n/30.
	20		Issued Check 104 to purchase merchandise, $3,000.
	25		Returned merchandise purchased on June 20 as defective, receiving a cash refund of $280.
	30		Purchased merchandise for $3,200, plus a freight charge of $85, from New Concepts Corporation, Invoice 1080; terms 2/10, n/30.

Required:
Journalize the transactions in a general journal.


Analyze:
What was the amount of trade discounts received on the June 15 purchase from Park Research?

Answer 1

Solution.

1

Date	General journal	Debit	Credit
June 1	merchandise inventory. Dr	$4500
	To bank		$4500
	(To record the purchase of inventory)
June 3	merchandise inventory. Dr	$1700
	To Account payable		$1700
	( To record the purchase of inventory on credit)
June 5	merchandise inventory. Dr	$5850
	Fright charge Dr	$110
	To Account payable		$5850
	To cash		$110
	( To record the purchase of inventory with freight charges)
June 9	Account payable. Dr	$1700
	To trade discount		$34
	To cash		$1666
	( To record the payment to biocentre)
June 10	Account payable. Dr	$150
	To merchandise return		$150
	( To record the return of inventory to new concept)
June 11	merchandise inventory. Dr	$1680
	To Account payable		$1680
	( To record the purchase of inventory on credit )
June 14	Account payable. Dr(5850-150)*2%	$5600
	To trade discount		$112
	To cash		$5488
	( To record the payment made to new concept with trade discount)
June 15	merchandise inventory. Dr	$6256
	To Account payable[9200-(9200*20%)*15%)		$6256
June 20	merchandise inventory. Dr	$3000
	To bank		$3000
	( To record the purchase of inventory)
June 25	cash. Dr	$280
	To merchandise return		$280
	( To record the return of inventory)
June 30	merchandise inventory. Dr	$3280
	Freight charges. Dr	$85
	To Account payable		$3280
	To cash		$85
	( To record the purchase of inventory with freight charges)

2 the amount of trade discount received from on June 15 from park research

(9200*20%) =$1840

$9200-1840

=7360*15*%

= 1104

Total discount =1840+1104

$2944