Chapter 5, Problem 3E

Exercise 5-3
Recording purchases, purchases returns, and purchases allowances
Prepare journal entries to record the following transactions for a retail store. The company uses a perpetual inventory system and the gross method.
Apr. 2 Purchased $4,600 of merchandise from Lyon Company with credit terms of 2/15,
n/60, invoice dated April 2, and FOB shipping point.
3 Paid $300 cash for shipping charges on the April 2 purchase.
4 Returned to Lyon Company unacceptable merchandise that had an invoice price of
$600.
17 Sent a check to Lyon Company for the April 2 purchase, net of the discount and
the returned merchandise.
18 Purchased $8,500 of merchandise from Frist Corp. with credit terms of 1/10,
n/30, invoice dated April 18, and FOB destination.
21 After negotiations, received from Frist a $500 allowance toward the $8,500 owed
on the April 18 purchase.
28 Sent check to Frist paying for the April 18 purchase, net of the allowance and
the discount.