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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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Recording Purchase and Sales Transactions

Raymond Company and Geeslin Company both use a perpetual inventory system. The following transactions occurred during the month of January:

Jan. 1 Raymond purchased $5,000 of merchandise on account from Geeslin with credit terms of 2/10, n/30. The cost of the merchandise was $3,750. Assume that Geeslin uses the net method to record sales discounts and no returns are expected at the time of sale.

8 Raymond returned $500 of the to Geeslin. The cost of the merchandise returned was $375.

10 Raymond paid invoices totaling $3,000 to Geeslin for the merchandise purchased on January 1.

30 Raymond paid Geeslin the balance due.

Required:

Prepare the journal entries to record these transactions on the books of Raymond and Geeslin.

Chapter 6, Problem 34BE, Recording Purchase and Sales Transactions Raymond Company and Geeslin Company both use a perpetual

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.

To prepare:

The journal entries for both buyer and seller under perpetual inventory system.

Explanation

The journal entries for both buyer and seller under perpetual inventory system are explained as follows:

Raymond Company
Journal Entries
Perpetual Inventory System
Date Account Title Debit Credit
Jan. 1 Merchandise Inventory $ 5,000
Accounts Payable-Geeslin Company $ 5,000
Cash
(Being merchandises purchased on account)
Jan. 8 Accounts Payable-Geeslin Company $ 500
Merchandise Inventory $ 500
(Being merchandises returned on account)
Jan. 10 Accounts Payable-Geeslin Company $ 3,000
Cash $ 3,000
(Being amount paid on account)
Jan. 30 Accounts Payable-Reece Company (5000-500-3000) $ 1,500
Cash $ 1,500
(Being amount paid on account)
Geeslin Company
Journal Entries
Perpetual Inventory System
Date Account Title Debit Credit
Jan...

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