Record transactions of purchasing company. On October 5, Splish Brothers Company buys merchandise on account from Bramble Company. The selling price of the goods is $4,700, and the cost to Bramble Company is $2,820. On October 8, Splish Brothers returns defective goods with a selling price of $720 and a fair value of $125. Record the transactions of Splish BrothersCompany, assuming a perpetual approach.

Question

Business

Madalyn Castro

19 June, 09:34

Record transactions of purchasing company. On October 5, Splish Brothers Company buys merchandise on account from Bramble Company. The selling price of the goods is $4,700, and the cost to Bramble Company is $2,820. On October 8, Splish Brothers returns defective goods with a selling price of $720 and a fair value of $125. Record the transactions of Splish BrothersCompany, assuming a perpetual approach.

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Alec · Answer 1

See explanation section

Explanation:

October 5 Merchandise Inventory Debit $4,700

Accounts Payable - Bramble Company Credit $4,700

To record the merchandise Inventory purchase on account. As the company uses perpetual inventory system, merchandise inventory becomes debit instead of purchase account.

October 8 Accounts payable Debit $720

Merchandise Inventory credit $720

To record the return of defective goods to Bramble Company. (Using perpetual inventory system)