Question

In: Accounting

Prepare the journal entries to record the following transactions on McLeena Company's books using a perpetual...

Prepare the journal entries to record the following transactions on McLeena Company's books using a perpetual inventory system. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.) 


(a) On March 2, Borst Company sold $800,000 of merchandise to McLeena Company on account, terms 2/10,n/30. The cost of the merchandise sold was $540,000. 

(b) On March 6, McLeena Company returned $140,000 of the merchandise purchased on March 2. The cost of the merchandise returned was $94,000. 

(c) On March 12, Borst Company received the balance due from McLeena Company.

Solutions

Expert Solution

Journal

Date

Account Title and Explanation

Debit

Credit

Mar 2 Inventory 800,000
Accounts payable - Borst company 800,000
march 6 Accounts payable - Borst company 140,000
Inventory 140,000
March 12 Accounts payable - Borst company 660,000
Inventory 13,200
Cash 646,800

Final amount due = Purchases - Purchase return

= 800,000 - 140,000

= $660,000

Discount = Final amount due x Discount rate

= 660,000 x 2%

= $13,200

Cash paid = Final amount due - Discount

= 660,000 - 13,200

= $646,800


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