Washington Company - Perpetual Inventory System
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Prepare an Excel file with the following journal entries, assuming a perpetual inventory system:
Washington Company engaged in the following transactions:
July 2 purchased merchandise on credit from Zapala Company, terms 2/10, n/30, FOB destination, invoice dated July 1,
$2,000.
The entry is
Merchandise Inventory Dr 2,000
Accounts Payable Cr 2,000
6 Returned some merchandise to Zapala Company for full credit, $250.00.
The entry is
Accounts Payable Dr 250
Merchandise Inventory Cr 250
11 Paid Zapala Company for purchase of July 2 less return and discount.
The total purchase is now 2,000-250=1,750. 2% discount is $35. The amount of cash paid is 1,715. The entry is
Accounts Payable Dr 1,750
Merchandise Inventory Cr 35
Cash Cr 1,715
14 Purchased merchandise on credit from Zapala Company, terms 2/10, n/30, FOB destination, invoice dated July 12, $2,250.
The entry is
Merchandise Inventory Dr 2,250
Accounts Payable Cr 2,250
31 Paid amount owed Zapala Company for purchase of July 14.
Since the amount is paid after the cash discount period, full amount would be paid. The entry is
Accounts Payable Dr 2,250
Cash Cr 2,250
Prepare journal entries and, assuming the perpetual inventory system, determine the total amount paid to Zapala Company.
Total amount paid is 1,715+2,250 = $3,965
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Solution Summary
The solution computes Washington Company's transactions with Zapala Company related to Inventory purchases.
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