Explanation General Journal: General journal is a type of journal which records the infrequent transactions of the business in chronological order. It also records those transactions which are not recorded in the special journal. Merchandise purchased on credit including freight charges: Date Account Title and Explanation Post Ref. Debit ($) Credit ($) April 1, 2019 Merchandise inventory 3,020 Accounts payable/Company OF 3,020 (to record the merchandise purchased on credit with 1/10, n/30 terms) Table (1) • The merchandise inventory account is debited. This is because the merchandise inventory can be identified as asset account and its balance increases. The freight charges are included within merchandise inventory account. No separate account is prepared for the freight charges under perpetual inventory system. • The accounts payable account is credited. This is because the accounts payable is a liability account and its balance increases. Recording the payment made with purchase discount: Date Account Title and Explanation Post Ref. Debit ($) Credit ($) April 9, 2019 Accounts payable/Company OF 3,020 Merchandise inventory 30 Cash 2,990 (to record the payment made and taking purchase discount ) Table (2) • The accounts payable is debited. This is because accounts payable is liability and its balance decreases. • The merchandise inventory account is credited. This is because purchase discount is received of the payment made and there is reduction is merchandise purchases cost. • The cash account is an asset account and its balance decreases. Therefore, it is credited. Working Note: The purchase discount under the perpetual inventory system is represented by the merchandise inventory account. The purchased discount is calculated on the merchandise purchases cost excluding purchase returns and the freight charges. The purchase discount is given as one percent of the merchandise purchase. Calculation of purchase discount: Purchases discount = ( ( Purchases amount − Purchases reutrns − Freight charges ) × ( Percentage of Purchases discount 100 ) ) = $ 3 , 000 × 1 100 = $ 30 The amount of purchase discount would be $30. Recording the merchandise purchase on credit including prepaid freight charges: Date Account Title and Explanation Post Ref. Debit ($) Credit ($) April 15, 2019 Merchandise inventory 1,325 Accounts payable/Company K 1,325 (to record the merchandise purchased on credit with 1/10, n/30 terms) Table (3) • The merchandise inventory can be identified as asset account and its balance increases

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ISBN: 9781260255157

Author: Haddock

Publisher: MCG CUSTOM

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Chapter 8, Problem 12E

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Prepare the general journal using perpetual inventory system for the recording the transactions.

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Chapter 8 Solutions

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Ch. 8 - Prob. 2.5SRE Ch. 8 - Prob. 2.6SRA Ch. 8 - What is the name of the account used to record...Ch. 8 - What type of account is Purchases Returns and...Ch. 8 - Prob. 3CSR Ch. 8 - Prob. 4CSR Ch. 8 - Prob. 5CSR Ch. 8 - Prob. 1DQ Ch. 8 - Prob. 2DQ Ch. 8 - Prob. 3DQ Ch. 8 - Prob. 4DQ Ch. 8 - Prob. 5DQ Ch. 8 - Prob. 6DQ Ch. 8 - What type of accounts are kept in the accounts...Ch. 8 - Prob. 8DQ Ch. 8 - Prob. 9DQ Ch. 8 - Prob. 10DQ Ch. 8 - Prob. 11DQ Ch. 8 - Prob. 12DQ Ch. 8 - Prob. 13DQ Ch. 8 - Why is using the Purchases Returns and Allowances...Ch. 8 - Prob. 15DQ Ch. 8 - Prob. 16DQ Ch. 8 - Prob. 17DQ Ch. 8 - Prob. 18DQ Ch. 8 - Identify the normal balance of the following...Ch. 8 - Prob. 2E Ch. 8 - Prob. 3E Ch. 8 - Record the following transactions of J. Min...Ch. 8 - Record the following transactions of Allen Inc.:Ch. 8 - Bushard Company (buyer) and Schmidt, Inc. (seller)...Ch. 8 - Prob. 7E Ch. 8 - Prob. 8E Ch. 8 - Prob. 9E Ch. 8 - Prob. 10E Ch. 8 - Prob. 11E Ch. 8 - Prob. 12E Ch. 8 - Prob. 13E Ch. 8 - Record the following transactions of Fashion Park...Ch. 8 - On April 1, Moloney Meat Distributors sold...Ch. 8 - Bushard Company (buyer) and Schmidt, Inc. (seller)...Ch. 8 - Annettes Photo Shop is a retail store that sells...Ch. 8 - Prob. 2PA Ch. 8 - Prob. 3PA Ch. 8 - NewTech Medical Devices is a medical devices...Ch. 8 - Prob. 5PA Ch. 8 - Bowden Company (buyer) and Song, Inc. (seller),...Ch. 8 - The following transactions took place at Fine...Ch. 8 - Prob. 1PB Ch. 8 - Taras Card and Novelty Shop is a retail card,...Ch. 8 - Prob. 3PB Ch. 8 - Prob. 4PB Ch. 8 - Prob. 5PB Ch. 8 - Belladonna Company (buyer) and Sachi, Inc....Ch. 8 - The following transactions took place at The...Ch. 8 - William Evans began Evans Distributors, a sporting...Ch. 8 - Prob. 2CTP Ch. 8 - Prob. 1MF Ch. 8 - Prob. 2MF Ch. 8 - Prob. 3MF Ch. 8 - Prob. 4MF Ch. 8 - Prob. 5MF Ch. 8 - Prob. 6MF Ch. 8 - Prob. 1ED

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Prepare the general journal using perpetual inventory system for the recording the transactions.

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