Answered: journal entry

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter11: The Statement Of Cash Flows

Section: Chapter Questions

Problem 37E: Analyzing the Accounts Casey Company uses a perpetual inventory system and engaged in the following...

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Recording Purchases

Compass Inc. purchased 1,250 bags of insulation from Glassco Corp. The bags of insulation cost $5.50 each. Compass paid Tremblay Trucking $320 to have the bags of insulation shipped to its warehouse. Compass returned 50 bags that were defective and paid for the remainder. Assume that Compass uses the perpetual inventory system and that Glassco did not offer a purchase discount. (Note: You are doing the accounting for Compass Inc.)

Required:

1. Prepare the journal entry to record the purchase of the bags of insulation.

2. Prepare the entry to record the payment for shipping.

3. Prepare the entry for the return of the defective bags.

4. Prepare the entry to record the payment for the bags kept by Compass.

5. What is the total cost of this purchase?

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