Question

Sept.Sept.

22

SalemSalem

buys

$ 23 comma 500$23,500

worth of inventory on account with credit terms of

2 divided by 15 comma n divided by 30 comma2/15, n/30,

FOB shipping point.

55

SalemSalem

pays a

$ 140$140

freight charge.

77

SalemSalem

returns

$ 5 comma 500$5,500

of the merchandise due to damage during shipment.

1414

SalemSalem

paid the amount​ due, less return and discount.

Consider the following transactions for

SalemSalem

Drug​ Store:

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Requirements

1.	Journalize the purchase transactions. Explanations are not required.
2.	In the final​ analysis, how much did the inventory cost SalemSalem​?

Requirement 1. Journalize the purchase transactions. Explanations are not required. ​(Assume the company uses a perpetual inventory system. Round the answers to the nearest whole dollar. Record debits​ first, then credits. Exclude explanations from journal​ entries.)

Sept.Sept.

22​:

SalemSalem

buys

$ 23 comma 500$23,500

worth of inventory on account with credit terms of

2 divided by 15 comma n divided by 30 comma2/15, n/30,

FOB shipping point.

Date			Accounts	Debit	Credit
Sept. 2

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Answer 1

Salem buys $23,500 worth of inventory on account with credit terms of 2/15, n/30, FOB shipping point.
Date	Accounts	Debit	Credit
Sept. 2	Inventory / Merchandise inventory	$23,500
	Accounts Payable		$23,500
Salem pays a $140 freight charge.
Date	Accounts	Debit	Credit
Sept.5	Inventory / Merchandise inventory	$140
	Cash		$140
Salem returns $5,500 of the merchandise due to damage during shipment.
Date	Accounts	Debit	Credit
Sept .7	Accounts Payable	$5,500
	Inventory / Merchandise inventory		$5,500
	`
Salem paid the amount due, less return and discount.
Sept .14	Accounts Payable                                                    [$23,500 - $5,500]	$18,000
	Inventory / Merchandise inventory                [Refer working note]		$360
	Cash            [Amount payable - discount availed = $18,000 - $360]		$17,640

.

.

Requirement 2. In the final analysis, how much did the inventory cost Salem?
The inventory cost for Salem is [$23,500 + $140 - $5,500 - $360]	$17,780

.

.

Working note - Calculation of discount availed
Amount payable on September 02 for purchase of inventory	$23,500
Less: Decrease of the amount payable due to the return of Inventory on September 07	$5,500
Net amount payable on September 14            (a)	$18,000
Discount percentage                                        (b)	2%
Discount availed                                               (a x b)	$360