EXERCISE 5-2
| Purpose: | (L.O. 2) This exercise reviews the journal entries to record purchases of merchandise inventory under a perpetual inventory system. |
A list of transactions for the Garth Brooks Memorabilia Sales Company appears below. A perpetual inventory system is used.
| July | 1 Purchased merchandise from Oliver Company for $3,000 cash.
2 Purchased merchandise from Medlin Company, $5,000, FOB shipping point, terms 2/10, n/30. 6 Paid freight on July 2 purchase, $125. 10 Paid Medlin Company the amount owed. 11 Purchased merchandise from McBride Company, $7,000, FOB destination, terms 1/10, n/30. 23 Paid McBride Company the amount owed. |
| Aug. | 7 Purchased merchandise from Dun Company, $4,000, FOB destination, terms 2/10, n/30.
9 Returned one-fourth of the merchandise acquired in the August 7 transaction to Dun Company because of detected defects. 16 Paid Dun Company the balance owed. |
Instructions
Prepare the journal entries to record these transactions on the books of the Garth Brooks Memorabilia Sales Company.
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