Question

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

Oct.	1	Purchased merchandise from UK Imports Co., $14,448, terms FOB destination, n/30.
	3	Purchased merchandise from Hoagie Co., $9,950, terms FOB shipping point, 2/10, n/eom. Prepaid freight of $220 was added to the invoice.
	4	Purchased merchandise from Taco Co., $13,650, terms FOB destination, 2/10, n/30.
	6	Issued debit memo to Taco Co. for $4,550 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., $27,300, terms FOB shipping point, n/eom.
	19	Paid freight of $400 on October 19 purchase from Veggie Co.
	20	Purchased merchandise from Caesar Salad Co., $22,000, 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. How does grading work? PAGE 10 JOURNAL ACCOUNTING EQUATION Score: 143/301 DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY 1 ✔ ✔ 2 ✔ 3 ✔ 4 5 ✔ 6 7 ✔ 8 9 10 11 ✔ ✔ 12 ✔ ✔ 13 14 15 ✔ ✔ 16 ✔ ✔ 17 ✔ ✔ 18 ✔ 19 ✔ ✔ 20 ✔ ✔ 21 ✔ 22 23 ✔ 24 Points: 28.5 / 60 Feedback Check My Work 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.

Answer 1

Solution:

The entries to record the transactions of Capers Company for October.

Date	Description	Debit $	Credit $	Assets	=	Liabilities	+	Equity
Oct 1,	Inventory A/c Dr	14,448		14,448
	To Accounts payable A/c - UK I.C		14,448			14,448
	(Being the purchase marchendise inventory)
Oct 3,	Inventory A/c Dr (9950 + 220)	10,170		10,170
	To Accounts payable A/c - H.C		10,1700			10,170
	(Being the purchase of marchendise inventory including frieght)
Oct 4,	Inventory A/c Dr	13,650		13,650
	To Accounts payable A/c T.C		13,650			13,650
	(Being the purchase of marchendise on account form T.C)
Oct 6,	Accounts payable A/c Dr T.C	4,550		-4,550
	To inventory A/c		4,550			-4,550
	(Being the marchendise inventory returned)
Oct 13,	Accounts payable A/c Dr H.C	10,170				-10,170
	To Cash A/c (10170 - 865)		9,971	-9,971
	To Inventory A/c (9950 * 2%)		199	199
	(Being the payment made to H.C for purchase on october 03)
Oct 14,	Accounts payable A/c Dr T.C (13650 - 4550)	9,100						-9,100
	To cash A/c			8,918		-8,918
	To Inventory A/c (9100 * 2%)			182		-182
	(Being the payment made and discount availed)
Oct 19,	Inventory A/c Dr V.C	27,300		27,300
	To Accounts payable A/c		27,300			27,300
	(Being the purchase of inventory on account)
Oct 19,	Inventory A/c Dr	400		400
	To cash A/c		400	-400
	(Being the payment of freight to V.C)
Oct 20,	Inventory A/c Dr	22,000		22,000
	To Accounts payable A/c C.S.C		22,000			22,000
	(Being the purchase of marchendise on account)
Oct 30,	Accounts payable A/c Dr C.S.C	22,000				-22,000
	To Cash A/c (22000 - 130)		21,780	-21,780
	To inventory A/c (22000 * 1%)		220	220
	(Being the payment made and discount availed)
Oct 31,	Accounts payable A/c Dr UK I.C	14,448				-14,448
	To Cash A/c		14,448	-14,448
	(Being the payment made to UK I.C for inventory)
Oct 31,	Accounts payable A/c Dr V.C	27,300				-27,300
	To Cash A/c		27,300	-27,300
	(Being the payment for purchase of merchandise inventory)