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Information related to Blue Spruce Corp. is presented below.1.

1. On April 5, purchased merchandise on account from Whispering Winds Company for $44,800, terms 4/10, net/30, FOB shipping point.
2. On April 6, paid freight costs of $830 on merchandise purchased from Whispering Winds.
3. On April 7, purchased equipment on account for $42,500.
4. On April 8, returned damaged merchandise to Whispering Winds Company and was granted a $4,600 credit for returned merchandise.
5. On April 15, paid the amount due to Whispering Winds Company in full.

Required:
Prepare journal entries to record these transactions on the books of Lor Co. using a periodic inventory system.

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Answer:

April 5

Dr Inventory $44,800

Cr Accounts Payable $44,800

April 6

Dr Inventory $830

Cr Cash $830

April 7

Dr Equipment $42,500

Cr Accounts Payable $42,500

Dr Accounts Payable $4,600

Cr Inventory credit $4,600

On April 15

Dr Accounts Payable (Inventory before discounts) credit 40200

($44,800 - $4,600)

Cr Cash (Inventory after discounts) credit 38592

Cr 40200-1608)

Cr Inventory (discounts) 1608

(40200 * 0.04 )

Explanation:

Preparation of journal entries to record these transactions on the books of Lor Co. using a periodic inventory system.

April 5

Dr Inventory $44,800

Cr Accounts Payable $44,800

April 6

Dr Inventory $830

Cr Cash $830

April 7

Dr Equipment $42,500

Cr Accounts Payable $42,500

Dr Accounts Payable $4,600

Cr Inventory credit $4,600

On April 15

Dr Accounts Payable (Inventory before discounts) credit 40200

($44,800 - $4,600)

Cr Cash (Inventory after discounts) credit 38592

Cr 40200-1608)

Cr Inventory (discounts) 1608

(40200 * 0.04 )

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