Question

Warwick's Co., a women's clothing store, purchased $75,000 of merchandise from a supplier on account, terms FOB destination, 2/10, n/30. Warwick's returned $9,000 of the merchandise, receiving a credit memo, and then paid the amount due within the discount period. Journalize Warwick's entry to record the purchase.

Answer 1

Answer:

inventory               75,000 debit

   account payable          75,000 credit

--to record sale--

account payable  9,000 debit

   inventory                    9,000 credit

--to record returned goods--

account payable  66,000 debit

        Inventory                  1,320 credit

        Cash                      64,680 credit

Explanation:

at purchase, we enter the inventory and recognize the liaiblity.

then, for the sales returned we decrease the inventory and our debt.

finally, at payment we determinate the account balance and apply the discount:

75,000 - 9,000 = 66,000

discount: 66,000 x 2% = 1,320

cash disbursement: 64,680