Effect of purchase returns and allowances and purchase discounts on the financial statements: Perpetual system LO 3-2, 3-3The following events were completed by Dana’s Imports in September, Year 1: Sept. 1Acquired $47,000 cash from the issue of common stock. 1Purchased $31,500 of merchandise on account with terms 2/10, n/30. 5Paid $650 cash for freight to obtain merchandise purchased on September 1. 8Sold merchandise that cost $10,750 to customers for $18,000 on account, with terms 2/10, n/30. 8Returned $700 of defective merchandise from the September 1 purchase to the supplier. 10Paid cash for the balance due on the merchandise purchased on September 1. 20Received cash from customers of September 8 sale in settlement of the account balances, but not within the discount period. 30Paid $3,200 cash for selling expenses.

The objective of the question is to understand the effect of purchase returns and allowances and…

Answered: Effect of purchase returns and…

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter5: Accounting For Retail Businesses

Section: Chapter Questions

Problem 34E

The following events were completed by Dana’s Imports in September, Year 1:

Sept.	1	Acquired $47,000 cash from the issue of common stock.
	1	Purchased $31,500 of merchandise on account with terms 2/10, n/30.
	5	Paid $650 cash for freight to obtain merchandise purchased on September 1.
	8	Sold merchandise that cost $10,750 to customers for $18,000 on account, with terms 2/10, n/30.
	8	Returned $700 of defective merchandise from the September 1 purchase to the supplier.
	10	Paid cash for the balance due on the merchandise purchased on September 1.
	20	Received cash from customers of September 8 sale in settlement of the account balances, but not within the discount period.
	30	Paid $3,200 cash for selling expenses.