Question

On May 11, Gradner Company sold $30,000 of merchandise to Dionne Company, the merchandise had cost Gradner Company $22,000. Dionne Company accepted delivery on May 12, with terms 2/10, n/30, FOB Gradner Company’s factory. When the goods were delivered, Express Shipping was paid $300 for the delivery charges on the merchandise. The next day, Dionne Company reported to Gradner that a few items were slightly dented, for which Gradner agreed to provide a credit of $1,800. On May 20, Dionne Company mailed a cheque to Gradner Company for the amount owing on that date. It was received by Gradner on May 22.

Required:

Prepare the journal entries for Dionne Company (the purchaser) who uses the PERPETUAL SYSTEM. Ignore all taxes. Omit headings and explanations.

Answer 1

Journal Entries in books of Dionne Company (the purchaser)
Date	Particulars	Debit Amount	Credit Amount
May-12	Mechandise Inventory Account	$                      30,000
	Gardner Company Account		$                    30,000
	(To record the purchase of inventory on account)
May-12	Mechandise Inventory Account	$                           300
	Cash Account		$                         300
	(To record the payment of shipping charges)
May-13	Gardner Company Account	$                        1,800
	Mechandise Inventory Account		$                      1,800
	(To record return of merchandise)
May-20	Gardner Company Account	$                      28,200
	Mechandise Inventory Account (28,200*2%)		$                         564
	Bank Account (28,200-564)		$                    27,636
	(To record payment for merchandise less the 2% discount)