The following July transactions relate to KitchenApps Inc. July 6: Purchase of inventory with a list price of $42,000, a trade discount of 20% (which buyers get with certainty), and with terms 2/10, n/30. July 8: Returned $3,000 of inventory (damaged in shipment) to the supplier (the $3,000 is the value after the trade discount). July 13: Paid $14,700 ($15,000 of inventory less a purchase discount of 2%, or $900) on account. July 31: Paid $15,600 cash to the supplier. Required Prepare journal entries prior to a physical inventory for these transactions assuming the company uses the periodic inventory system and the net method for recording purchase discounts.
The following July transactions relate to KitchenApps Inc. July 6: Purchase of inventory with a list price of $42,000, a trade discount of 20% (which buyers get with certainty), and with terms 2/10, n/30. July 8: Returned $3,000 of inventory (damaged in shipment) to the supplier (the $3,000 is the value after the trade discount). July 13: Paid $14,700 ($15,000 of inventory less a purchase discount of 2%, or $900) on account. July 31: Paid $15,600 cash to the supplier. Required Prepare journal entries prior to a physical inventory for these transactions assuming the company uses the periodic inventory system and the net method for recording purchase discounts.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Answer with detailed working please
Transcribed Image Text:The following July transactions relate to KitchenApps Inc.
July 6: Purchase of inventory with a list price of $42,000, a trade discount of 20% (which buyers get with certainty), and with terms 2/10,
n/30.
July 8: Returned $3,000 of inventory (damaged in shipment) to the supplier (the $3,000 is the value after the trade discount).
July 13: Paid $14,700 ($15,000 of inventory less a purchase discount of 2%, or $900) on account.
July 31: Paid $15,600 cash to the supplier.
Required
Prepare journal entries prior to a physical inventory for these transactions assuming the company uses the periodic inventory system and
the net method for recording purchase discounts.
Date
July 6
Account
To record purchase of inventory.
July 8
To record inventory return
July 13
To record payment within discount period
July 31
To record payment after discount period
Cr.
Dr.
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