Question

Purchase-Related Transactions Warwick’s Co., a women's clothing store, purchased $27,000 of merchandise from a supplier on account, terms FOB destination, 2/10, n/30. Warwick’s returned $4,100 of the merchandise, receiving a credit memo, and then paid the amount due within the discount period. a. Journalize Warwick’s Co.'s entry to record the purchase. b. Journalize Warwick’s Co.'s entry to record the merchandise return. c. Journalize Warwick’s Co.'s entry to record the payment.

Answer 1

Answer:    Explanation:

inventory 27,000

account payable   27,000

to record purchase on account

account payable 4,100

inventory                4,100

to recordreturn of goods

account payable 22,900   (27,000 - 4,100)

    discount received     458  (22,900 x 2%)

    cash                      22,442   (22,900 - 458)

to record payment within discount period