Question

Prepare journal entries to record the following transactions of Recycled Fashion retail store. Recycled Fashion uses a perpetual inventory system and the gross method.

  

Mar. 3 Purchased $1,350 of merchandise made from recycled material from GreenWorld Company with credit terms of 2/15, n/60, invoice dated March 3, and FOB shipping point.

4 Paid $80 cash for shipping charges on the March 3 purchase.

5 Returned to GreenWorld unacceptable merchandise that had an invoice price of $100.

18 Paid GreenWorld for the March 3 purchase, net of the discount and the returned merchandise.

19 Purchased $815 of fair trade merchandise from PeopleFirst Corp. with credit terms of 1/10, n/30, invoice dated March 19, and FOB destination.

21 After negotiations, received from PeopleFirst a $15 allowance (for scuffed merchandise) toward the $815 owed on the March 19 purchase.

29 Sent check to PeopleFirst paying for the March 19 purchase, net of the allowance and the discount.

Answer 1

No.	Date	Accounts Titles and Explanations	Debit ($)	Credit ($)
1	Mar. 3	Merchandise Inventory	$ 1,350
		Account Payable - GreenWorld Company		$ 1,350
2	Apr. 04	Merchandise Inventory	$ 80
		Cash		$ 80
3	Apr. 05	Account Payable - GreenWorld Company	$ 100
		Merchandise Inventory		$ 100
4	Apr. 18	Account Payable - GreenWorld Company ( $ 1,350 (-) $ 100 )	$ 1,250
		Merchandise Inventory                 ($ 1,250 x 2% )		$ 25
		Cash		$ 1,225
5	Apr. 19	Merchandise Inventory	$ 815
		Account Payable- People Frist		$ 815
6	Apr. 21	Account Payable - People Frist	$ 15
		Merchandise Inventory		$ 15
7	Apr. 29	Account Payable- People Frist ( $ 815 (-) $ 15)	$ 800
		Merchandise Inventory ( $ 800 x 1% )		$ 80
		Cash		$ 720