Question

The following selected transactions were completed by Capers Company during October of the current year:

Oct.

1 Purchased merchandise from UK Imports Co., $13,031, terms FOB destination, n/30.

3 Purchased merchandise from Hoagie Co., $9,150, terms FOB shipping point, 2/10, n/eom. Prepaid freight of $205 was added to the invoice.

4 Purchased merchandise from Taco Co., $14,800, terms FOB destination, 2/10, n/30.

6 Issued debit memo to Taco Co. for $4,600 of merchandise returned from purchase on October 4.

13 Paid Hoagie Co. for invoice of October 3.

14 Paid Taco Co. for invoice of October 4, less debit memo of October 6.

19 Purchased merchandise from Veggie Co., $26,320, terms FOB shipping point, n/eom.

19 Paid freight of $410 on October 19 purchase from Veggie Co.

20 Purchased merchandise from Caesar Salad Co., $20,100, terms FOB destination, 1/10, n/30.

30 Paid Caesar Salad Co. for invoice of October 20.

31 Paid UK Imports Co. for invoice of October 1.

31 Paid Veggie Co. for invoice of October 19.

Journalize the entries to record the transactions of Capers Company for October. Refer to the Chart of Accounts for exact wording of account titles.

Journalize these transactions from the buyer's perspective. Discounts are taken on the amount owed to the seller, except for any freight costs. Oct. 1, 3, 4, 19 & 20: Using the perpetual inventory system, purchases of inventory on account are recorded by debiting the merchandise inventory account and crediting the accounts payable account. Under FOB shipping point, freight is paid by the buyer, while FOB destination freight is the seller's expense. Often freight must be prepaid for the carrier to deliver. Oct. 6: Any discounts or returns are recorded directly by the buyer who debits Accounts Payable and credits Merchandise Inventory, basically reversing what was done in recording the purchase. Oct. 13: Since the invoice is paid within the discount period, the cash paid on account is the difference between the invoice and the discount. Oct. 14: Returns are not eligible for discounts. Since the invoice is paid within the discount period, Accounts Payable is debited for the balance in the account. The cash paid on account is the difference between the invoice and the discount, less the returns. Oct. 19: Freight expense increases the cost of the merchandise. However, freight is typically prepaid in cash. Oct. 30: Since the invoice is paid within the discount period, the cash paid on account is the difference between the invoice and the discount. Oct. 31 (UK Imports & Veggie): Since no discounts are allowed, no discounts are recorded. The cash paid on account in each case is equal to the invoice. CHART OF ACCOUNTS Capers Company General Ledger ASSETS 110 Cash 120 Accounts Receivable 125 Notes Receivable 130 Inventory 131 Estimated Returns Inventory 140 Office Supplies 141 Store Supplies 142 Prepaid Insurance 180 Land 192 Store Equipment 193 Accumulated Depreciation-Store Equipment 194 Office Equipment 195 Accumulated Depreciation-Office Equipment LIABILITIES 211 Accounts Payable-Caesar Salad Co. 212 Accounts Payable-Hoagie Co. 213 Accounts Payable-Taco Co. 214 Accounts Payable-UK Imports Co. 215 Accounts Payable-Veggie Co. 216 Salaries Payable 218 Sales Tax Payable 219 Customer Refunds Payable 221 Notes Payable EQUITY 310 Common Stock 311 Retained Earnings 312 Dividends 313 Income Summary REVENUE 410 Sales 610 Interest Revenue EXPENSES 510 Cost of Goods Sold 521 Delivery Expense 522 Advertising Expense 524 Depreciation Expense-Store Equipment 525 Depreciation Expense-Office Equipment 526 Salaries Expense 531 Rent Expense 533 Insurance Expense 534 Store Supplies Expense 535 Office Supplies Expense 536 Credit Card Expense 539 Miscellaneous Expense 710 Interest Expense

Answer 1

Date	Accounts Title	Dr	Cr
1-Oct	Mercandise Inventory	$13,031
	Accounts payable		$13,031
3-Oct	Mercandise Inventory	$9,355
	Accounts payable		$9,150
	Cash		$205
	(9150+205)
4-Oct	Mercandise Inventory	$14,800
	Accounts payable		$14,800
6-Oct	Accounts payable	$4,600
	Mercandise Inventory		$4,600
13-Oct	Accounts payable	$9,150
	Cash		$9,150
14-Oct	Accounts payable	$10,200
	Inventory (14800-4600)*2%		204
	Cash (bal fig)		$9,996
19-Oct	Mercandise Inventory	$26,320
	Accounts payable		$26,320
19-Oct	Mercandise Inventory	$410
	Cash		$410
20-Oct	Mercandise Inventory	$20,100
	Accounts payable		$20,100
30-Oct	Accounts payable	$20,100
	Inventory 20100*2%		$402
	Cash (bal fig)		$19,698
31-Oct	Accounts payable	$13,031
	Cash		$13,031
31-Oct	Accounts payable	$26,320
	Cash		$26,320
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