Question

Can somebody review question 39P in Jeffrey Waybrights financial accounting? The answer is incorrect, the problem solving solutions provided here DO NOT include the discount terms. Example 2/15 (2% discount if paid within 15 days) in the Oct. 4th transaction. The resulting gross profit for the month of October should be $651.75. I am struggling with recording the discount terms in the corrrct form, and I need a reference for my work. The question is:

Journalize the following transactions

The following transactions for Liberty Tire Co. occurred during October.

Oct. 4th. Purchased $5900 of merchandise on account from Firerock tire. Terms, 2/15, n/45, FOB shipping point. Firerock tire prepaid $300 shipping costs and added the amount to the invoice.

Oct 7th. Purchased $350 of supplies on account from OfficeMaxx.

Oct. 9th. Sold $950 (cost, $500) of merchandise on account to L. Simpson. Terms, 3/15, n/45, FOB destination.

Oct 11th. Paid $75 freight charges to deliver goods to L. Simpson.

Oct 13th. Returned $1400 of the merchandise purchased on Oct. 4th and received a credit

Oct. 15th. Sold $650 (cost $350) of merchandise to cash customers

Oct. 16th. Paid for the supplies purchased on Oct. 7th

Oct. 18th. Paid Firerock tire the amount due from the Oct. 4th purchase, in full.

Oct. 20th. L. Simpson returned $175 (cost $100) of merchandise from the Oct. 9th sale.

Oct. 22nd Purchased $2100 of inventory. Paid cash

Oct. 23rd Received payment in full from L. Simpson for the Oct 9th sale.

Also, what was Liberty Tires gross profit for the month of October?

Answer 1

Journal Entries-
		Debit	Credit
Oct. 4th. Purchased $5900 of merchandise on account from Firerock tire. Terms, 2/15, n/45, FOB shipping point. Firerock tire prepaid $300 shipping costs and added the amount to the invoice.
4th Oct	Purchases Account	$5900
	Shipping Costs	$300
	Firerock Ctire		$6200
Oct 7th. Purchased $350 of supplies on account from OfficeMaxx.
7th Oct	Office Supplies	$350
	Office Maxx		$350
Oct. 9th. Sold $950 (cost, $500) of merchandise on account to L. Simpson. Terms, 3/15, n/45, FOB destination.
9th Oct	L.Simpson	$950
	Sales Account		$950
Oct 11th. Paid $75 freight charges to deliver goods to L. Simpson.
11th Oct	Freight Charges	$75
	Cash		$75
Oct 13th. Returned $1400 of the merchandise purchased on Oct. 4th and received a credit
13th Oct	Firerock Ctire	$1400
	Purchase return		$1400
Oct. 15th. Sold $650 (cost $350) of merchandise to cash customers
15th Oct	Cash	$650
	Sales		$650
Oct. 16th. Paid for the supplies purchased on Oct. 7th
16th Oct	Office Maxx	$350
	Cash		$350
Oct. 18th. Paid Firerock tire the amount due from the Oct. 4th purchase, in full.
18th Oct	Firerock tire	4800
	Discount on purchase		96
Discount if paid withing 15days 2%	Cash		4704
=(Purchase+freight-Purchase return)*2%
=(6200-1400)*2%
96
Oct. 20th. L. Simpson returned $175 (cost $100) of merchandise from the Oct. 9th sale.
20th Oct	Sales Return	$175
	To L. Simpson		$175
Oct. 22nd Purchased $2100 of inventory. Paid cash
22nd Oct	Purchase Account	$2100
	Cash		$2100
Oct. 23rd Received payment in full from L. Simpson for the Oct 9th sale.
23rd Oct	Cash	751.75
	Discount on Sales	23.25
	L. Simpson		775
Discount on Sales if received within15 days @ 3%
=(Sales-Sales Return)
=(950-175)*3%
23.25
Sales	1600
Less Returns	175
		1425
Cost of Goods Sold	850
Less: Cost of Sales Return	100
	750
Less :Discount on Sales	23.75	773.75
Gross Profit		651.25
Note-
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