Question

Jul. 8	Lil Squirt Toys purchased $123,300 worth of PegaBlock toys on account with credit terms of 2/10, n/30.
Jul. 13	Lil Squirt Toys returned $12,250 of the merchandise to PegaBlock due to damage during shipment.
Jul. 14	Lil Squirt Toys paid the amount due, less the return and discount.

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

Answer 1

JOURNAL
Date	General Journal	Debit	Credit
July,8	Purchases:Pega Block Toys	$1,23,300
	Accounts Payables		$1,23,300
	(Inventory Purchased on Account)
July,13	Accounts Payables	$12,250
	Purchase Returns & Allowances		$12,250
	(Inventory Returned)
July,14	Account Payables	$1,11,050
	Discount Received		$2,221	(0.02*$1,11,050)
	Cash		$1,08,829	($1,11,050 - $2,221)
	(To record payment of invoice within discount period; 2% purchase discount availed)
	Cost Of Inventory
	Purchases		$1,23,300
LESS:	Purchase Returns & Allowances		$12,250
	Net Purchases		$1,11,050
LESS:	Discount Received		$2,221
	Net Cost Of Inventory Purchased		$1,08,829