Question

Sandhill Stores is a new company that started operations on March 1, 2021. The company has decided to use a perpetual inventory system. The following purchase transactions occurred in March: Mar. 1 Sandhill Stores purchases $8,600 of merchandise for resale from Octagon Wholesalers, terms 2/10, n/30, FOB shipping point. 2 The correct company pays $155 for the shipping charges. 3 Sandhill returns $1,200 of the merchandise purchased on March 1 because it was the wrong colour. Octagon gives Sandhill a $1,200 credit on its account. 21 Sandhill Stores purchases an additional $14,000 of merchandise for resale from Octagon Wholesalers, terms 2/10, n/30, FOB destination. 22 The correct company pays $190 for freight charges. 23 Sandhill returns $400 of the merchandise purchased on March 21 because it was damaged. Octagon gives Sandhill a $400 credit on its account. 30 Sandhill paid Octagon the amount owing for the merchandise purchased on March 1. 31 Sandhill paid Octagon the amount owing for the merchandise purchased on March 21. Collapse question part (a) Prepare Sandhill Stores' journal entries to record the above transactions

Answer 1

Date	Account Titles & explanations	Debit	Credit
Mar.1	Merchandise Inventory	8600
	Accounts Payable - Octagon Wholesalers		8600
Mar.2	Merchandise Inventory	155
	Cash		155
Mar.3	Accounts Payable - Octagon Wholesalers	1200
	Merchandise Inventory		1200
Mar.21	Merchandise Inventory	14000
	Accounts Payable - Octagon Wholesalers		14000
Mar.22	Merchandise Inventory	190
	Cash		190
Mar.23	Accounts Payable - Octagon Wholesalers	400
	Merchandise Inventory		400
Mar.30	Accounts Payable - Octagon Wholesalers	7400
	Cash		7400
Mar.31	Accounts Payable - Octagon Wholesalers	13600
	Merchandise Inventory (13600 x 2%)		272
	Cash		13328