In: Accounting
A. On June 10, Crane Company purchased $9,000 of merchandise on account from Pronghorn Company, FOB shipping point, terms 2/10, n/30. Crane pays the freight costs of $550 on June 11. Damaged goods totaling $350 are returned to Pronghorn for credit on June 12. The fair value of these goods is $80. On June 19, Crane pays Pronghorn Company in full, less the purchase discount. Both companies use a perpetual inventory system.
Prepare separate entries for each transaction on the books of
Crane Company. (Credit account titles are automatically
indented when amount is entered. Do not indent manually. Record
journal entries in the order presented in the
problem.)
B.
|
Answer to Question A.
Date | Account Title and Explanation | Debit | Credit |
Jun10 | Inventory | 9,000 | |
Accounts Payable | 9,000 | ||
(Purchase of Merchandise on account) | |||
Jun 11 | Inventory | 550 | |
Cash | 550 | ||
(Freight cost paid) | |||
Jun 12 | Accounts Payable | 350 | |
Inventory | 350 | ||
(Damaged goods returned) | |||
Jun 19 | Accounts Payable ($9,000 - $350) | 8,650 | |
Cash [($9,000 - $350) * 98%] | 8,477 | ||
Inventory [($9,000 - $350) * 2%] | 173 |