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14 August, 19:34

Journalize entries for the following related transactions of Lilly Heating & Air Company: Purchased $36,000 of merchandise from Schell Co. on account, terms 1/10, n/30. Paid the amount owed on the invoice within the discount period. Discovered that $9,000 of the merchandise purchased in (A) was defective and returned items, receiving credit. Purchased $5,000 of merchandise from Schell Co. on account, terms n/30. Received a refund from Schell Co. for return in (C) less the purchase in (D).

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  1. 14 August, 22:55
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    The Journal entries are as follows:

    (a) Inventory A/c Dr. $35,640

    To Accounts payable $35,640

    (To record the purchase of inventory on account)

    Workings:

    Inventory:

    = [$36,000 - ($36,000 * 1%) ]

    = $35,640

    (b) Accounts payable A/c Dr. $35,640

    To cash $35,640

    (To record the payment made to Schell Co.)

    (c) Accounts payable A/c Dr. $8,910

    To Inventory A/c $8,910

    (To record the return of inventory purchased from Schell Co.)

    Workings:

    Inventory:

    = [$9,000 - ($9,000 * 1%) ]

    = $8,910

    (d) Inventory A/c Dr. $35,640

    To Accounts payable - S. co $35,640

    (To record the purchase of inventory on account)

    (e) Cash A/c Dr. $3,910

    To accounts payable $3,910

    (To record the receipt of refund from S co.)

    Workings:

    Cash = $8,910 - $5,000

    = $3,910
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