Question

Some of the transactions of Cullumber Company during August are listed below. Cullumber uses the periodic inventory method. August 10 Purchased merchandise on account, $12,300, terms 2/10, n/30. 13 Returned part of the purchase of August 10, $1,300, and received credit on account. 15 Purchased merchandise on account, $17,100, terms 1/10, n/60. 25 Purchased merchandise on account, $21,400, terms 2/10, n/30. 28 Paid invoice of August 15 in full.

Question 1:Assuming that purchases are recorded at net amounts and that discounts lost are treated as financial expenses: Prepare general journal entries to enter the transactions.

Question 2: assuming that purchases are recorded at net amounts and that discounts lost are treated as financial expenses: Prepare the adjusting entry necessary on August 31 if financial statements are to be prepared at that time.

Answer 1

Date	Particulars	Debit($)	Credit($)
10-Aug	Merchandise Inventory	12300
	Accounts Payable		12300
	Purchased merchandise on accountterms 2/10, n/30
13-Aug	Accounts Payable	1300
	Returned Merchandise Inventory		1300
	Returned part of the purchase
15-Aug	Merchandise Inventory	17100
	Accounts Payable		17100
	Purchased merchandise on accountterms 1/10, n/60
25-Aug	Merchandise Inventory	21400
	Accounts Payable		21400
	Purchased merchandise on accountterms 2/10, n/30
28-Aug	Accounts Payable	17100
	Cash		17100
	Cash Paid on August 15 Transactions

Accounts Payable Ledger
Date	Debit($)	Credit($)	Balance($)
10-Aug		12300	-12300
13-Aug	1300		-11000
15-Aug		17100	-28100
25-Aug		21400	-49500
28-Aug	17100		-32400 Cr

Merchandise Inventory Ledger
Date	Debit($)	Credit($)	Balance($)
10-Aug	12300		12300
15-Aug	17100		29400
25-Aug	21400		50800 Dr

Returned Merchandise Inventory Ledger
Date	Debit($)	Credit($)	Balance($)
13-Aug		1300	-1300 Cr

Cash Ledger
Date	Debit($)	Credit($)	Balance($)
28-Aug		17100	-17100 Cr

Net purchasre Inventory
Particulars	Amount ($)
Purchase Merchandise Inventory	50800
Less: Returned Merchandise Inventory	1300
Net purchasre Inventory	49500

Date	Particulars	Debit($)	Credit($)
31-Aug	Income Summary	49500
	Merchandise Inventory		49500