Question

E5B-29 Journalizing purchase transactions—periodic inventory system

Learning Objective 8 Appendix 5B

Lawrence Appliances had the following purchase transactions. Journalize all necessary transactions using the periodic inventory system. Explanations are not required.

Sep. 4	Purchased inventory of $6,900 on account from Max Appliance Wholesale, an appliance wholesaler. Terms were 3/15, n/30, FOB shipping point.
4	Paid freight charges, $480.
10	Returned $300 of inventory to Max.
17	Paid Max Appliance Wholesale, less return and discount.
20	Purchased inventory of $3,900 on account from MY Appliance, an appliance wholesaler. Terms were 1/10, n/45, FOB destination.
22	Received a $400 allowance from MY Appliance for damaged but usable goods.
29	Paid MY Appliance, less allowance and discount.

.

Answer 1

Solution:

Journal Entries
Date	Particulars	Debit	Credit
4-Sep	Purchases Dr	$6,900.00
	To Accounts Payable		$6,900.00
4-Sep	Freight Inward Dr	$480.00
	To Cash		$480.00
10-Sep	Accounts Payable Dr	$300.00
	To Purchase returns and allowances		$300.00
17-Sep	Accounts Payable Dr	$6,600.00
	To Cash		$6,402.00
	To Purchase discount		$198.00
20-Nov	Purchases Dr	$3,900.00
	To Accounts Payable		$3,900.00
	(To record cost of goods sold)
22-Nov	Accounts Payable Dr	$400.00
	To Purchase returns and allowances		$400.00
29-Nov	Accounts Payable Dr	$3,500.00
	To Cash		$3,465.00
	To Purchase discount		$35.00