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Question: Exercise 5-4 On June 10, Tuzun Company purchased $6,650 of merchandise from Epps Company, FOB shi...

Exercise 5-4 On June 10, Tuzun Company purchased $6,650 of merchandise from Epps Company, FOB shipping point, terms 2/10, n/30. Tuzun pays the freight costs of $580 on June 11. Damaged goods totaling $350 are returned to Epps for credit on June 12. The fair value of these goods is $80. On June 19, Tuzun pays Epps Company in full, less the purchase discount. Both companies use a perpetual inventory system. Prepare separate entries for each transaction on the books of Tuzun Company. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Record journal entries in the order presented in the problem.)

Date Account Titles and Explanation Debit Credit

Prepare separate entries for each transaction for Epps Company. The merchandise purchased by Tuzun on June 10 had cost Epps $5,000. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Record journal entries in the order presented in the problem.)

Date Account Titles and Explanation Debit Credit

(To record credit sale) (To record cost of merchandise sold) (To record merchandise returned) (To record cost of merchandise returned) June 19

Answer 1

SOLUTION

1.

Date	Accounts title and Explanations	Debit ($)	Credit ($)
June 10	Inventory	6,650
	Accounts Payable		6,650
June 11	Inventory	580
	Cash		580
June 12	Accounts Payable	350
	Inventory		350
June 19	Accounts Payable ($6,650 - $350)	6,300
	Inventory ($6,300 *2%)		126
	Cash		6,174

2.

Date	Accounts title and Explanation	Debit ($)	Credit ($)
June 10	Accounts Receivable	6,650
	Sales Revenue		6,650
	(To record credit sale)
	Cost of Goods Sold	5,000
	Inventory		5,000
	(To record cost of merchandise sold)
June 12	Sales Returns and Allowances	350
	Accounts Receivable		350
	(To record merchandise returned)
	Inventory	80
	Cost of Goods Sold		80
	(To record cost of merchandise returned)
June 19	Cash	6,174
	Sales Discounts	126
	Accounts Receivable		6,300