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Journalize

Mar. ​5: Purchased $ 4600 of merchandise inventory on​ account, 2​/10​, ​n/EOM and FOB shipping point.

3 answers

To journalize the transaction for purchasing merchandise inventory on account, you'll need to make an entry that reflects the purchase. Here’s how you would record the transaction on March 5:

Journal Entry:

Date: March 5
Account Titles and Explanation:

  • Merchandise Inventory $4,600
    (To record purchase of merchandise inventory)
  • Accounts Payable $4,600
    (To record liability for merchandise purchased on account)

Debit: Merchandise Inventory $4,600
Credit: Accounts Payable $4,600

Explanation: Purchased merchandise inventory on account, terms 2/10 n/EOM, FOB shipping point.

Notes:

  • The Merchandise Inventory account is debited to increase the asset.
  • The Accounts Payable account is credited to recognize the obligation to pay the supplier.
  • The terms of the purchase (2/10 n/EOM) indicate that a 2% discount can be taken if payment is made within 10 days; otherwise, the net amount is due at the end of the month. The FOB shipping point means that the buyer is responsible for shipping costs from the point of origin.
Journalize Returned $ 1200 of defective merchandise purchased on March 5.

To journalize the return of defective merchandise purchased on March 5, you'll need to make an entry that reflects the reduction of inventory and accounts payable. Here’s how you would record the transaction for the return:

Journal Entry:

Date: [Insert Date of Return]
Account Titles and Explanation:

  • Accounts Payable $1,200
    (To record return of defective merchandise)
  • Merchandise Inventory $1,200
    (To reduce inventory for merchandise returned)

Debit: Accounts Payable $1,200
Credit: Merchandise Inventory $1,200

Explanation: Returned defective merchandise purchased on March 5.

Notes:

  • The Accounts Payable account is debited to reduce the liability owed to the supplier.
  • The Merchandise Inventory account is credited to reflect the decrease in inventory due to the returned goods.

Make sure to replace "[Insert Date of Return]" with the actual date of the merchandise return when preparing your journal entry.