Chapter_5_Student

Recording purchases of merchandise recording

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Chapter 5-7 SO 2 Explain the recording of purchases under a perpetual inventory system. Recording Purchases of Merchandise Recording Purchases of Merchandise E5-2 Information related to Steffens Co. is presented below. Prepare the journal entry to record the transaction under a perpetual inventory system. 1. On April 5, purchased merchandise from Bryant Company for $25,000 terms 2/10, net/30, FOB shipping point. April 5 Chapter 5-8 SO 2 Explain the recording of purchases under a perpetual inventory system. Recording Purchases of Merchandise Recording Purchases of Merchandise Not all purchases increase Merchandise Inventory. E5-2 Prepare the journal entry to record the transaction under a perpetual inventory system. 3. On April 7, purchased equipment on account for $26,000. April 7 Chapter 5- 9 SO 2 Explain the recording of purchases under a perpetual inventory system. Recording Purchases of Merchandise Recording Purchases of Merchandise Recording Freight Costs Terms FOB shipping point ­ seller places goods Free On Board the carrier, and buyer pays freight costs. FOB destination ­ seller places the goods Free On Board to the buyer’s place of business, and seller pays freight costs. Freight costs incurred by the seller on outgoing merchandise are an operating expense to the seller (Freight­out or Delivery Expense). Chapter 5-10 SO 2 Explain the recording of purchases under a perpetual inventory system. Recording Purchases of Merchandise Recording Purchases of Merchandise E5-2 Continued Prepare the journal entry to record the transaction Continued under a perpetual inventory system. 2. On April 6, paid freight costs of $900 on merchandise purchased from Bryant. April 6 Chapter 5-11 SO 2 Explain the recording of purchases under a perpetual inventory system. Recording Purchases of Merchandise Recording Purchases of Merchandise Purchase Returns and Allowances Purchaser may be dissatisfied because goods damaged or defective, of inferior quality, or do not meet specifications. Purchase Return Purchase Allowance Return goods for credit if the sale was made on credit, or for a cash refund if the purchase was for cash. May choose to keep the merchandise if the seller will grant an allowance (deduction) from the purchase price. Chapter 5-12...
View Full Document

This note was uploaded on 10/21/2013 for the course ISDS 2000 taught by Professor Nunnery during the Fall '08 term at LSU.

Ask a homework question - tutors are online