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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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BuyFindarrow_forward

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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Use the following information for Cornerstone Exercises 6-20 and 6-21:

Mathis Company and Reece Company use the perpetual inventory system. The following transactions occurred during the month of April:

a. On April 1, Mathis purchased merchandise on account from Reece with credit terms of 2/10, n/30. The selling price of the merchandise was $3,100, and the cost of the merchandise sold was $2,225.

b. On April 1, Mathis paid freight charges of S250 cash to have the goods delivered to its warehouse.

c. On April 8, Mathis returned $800 of the merchandise which had originally cost Reece $500.

d. On April 10, Mathis paid Reece the balance due.

Recording Purchase Transactions

Refer to the information for Mathis and Reece companies on the previous page.

Required:

1. Prepare the journal entry to record the April I purchase of merchandise and payment of freight by Mathis.

2. Prepare the journal entry to record the April 8 return of merchandise.

3. Prepare the journal entry to record the April 10 payment to Reece.

To determine

Concept introduction:

Perpetual Inventory System:

The perpetual inventory system records and updates the inventory after each and every transaction. The inventory balance is updated after each transaction and it is kept up to date at every time.

Requirement 1:

To prepare:

The Journal entry to record the April 1 Purchase and payment of freight.

Explanation

The Journal entry to record the April 1 Purchase and payment of freight is explained as follows:

Mathis Company
Journal Entries
Perpetual Inventory System
Date Account Title
To determine

Concept introduction:

Perpetual Inventory System:

The perpetual inventory system records and updates the inventory after each and every transaction. The inventory balance is updated after each transaction and it is kept up to date at every time.

Requirement 2:

To prepare:

The Journal entry to record the April 8 return of merchandise.

To determine

Concept introduction:

Perpetual Inventory System:

The perpetual inventory system records and updates the inventory after each and every transaction. The inventory balance is updated after each transaction and it is kept up to date at every time.

Requirement 3:

To prepare:

The Journal entry to record the April 10 Payment.

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