The following April transactions relate to CargoTranspo Inc. April 5 Purchased
inventory for $33,600 , with terms 2/10, n/30. 7 Returned $3,000 of inventory
(damaged in shipment) to the supplier. 20 Paid $14,700 ( $15,000 of inventory
less discount of $300 ) on account. 30 Paid the remaining accounts payable
balance. Required Prepare journal entries for these transactions assuming the
company uses the perpetual inventory system and the gross method for
recording purchase discounts. Date Account Dr. Cr. April 5 CashAccounts
PayableAccounts ReceivableCost of Goods SoldDeferred RevenueFreight-
inInterest ExpenseInventoryOther ExpensesPurchase DiscountsPurchase
Returns and AllowancesPurchasesSales ReturnSales RevenueGain on Inventory
OverageLoss on Inventory ShortageN/A Answer 1 CashAccounts
PayableAccounts ReceivableCost of Goods SoldDeferred RevenueFreight-
inInterest ExpenseInventoryOther ExpensesPurchase DiscountsPurchase
Returns and AllowancesPurchasesSales ReturnSales RevenueGain on Inventory
OverageLoss on Inventory ShortageN/A Answer 2 To record purchase of
inventory April 7 CashAccounts PayableAccounts ReceivableCost of Goods
SoldDeferred RevenueFreight-inInterest ExpenseInventoryOther
, ExpensesPurchase DiscountsPurchase Returns and AllowancesPurchasesSales
ReturnSales RevenueGain on Inventory OverageLoss on Inventory
ShortageN/A Answer 3 CashAccounts PayableAccounts ReceivableCost of
Goods SoldDeferred RevenueFreight-inInterest ExpenseInventoryOther
ExpensesPurchase DiscountsPurchase Returns and AllowancesPurchasesSales
ReturnSales RevenueGain on Inventory OverageLoss on Inventory
ShortageN/A Answer 4 To record inventory return April 20 CashAccounts
PayableAccounts ReceivableCost of Goods SoldDeferred RevenueFreight-
inInterest ExpenseInventoryOther ExpensesPurchase DiscountsPurchase
Returns and AllowancesPurchasesSales ReturnSales RevenueGain
Answer & Explanation
To prepare the journal entries for CargoTranspo Inc. using the perpetual
inventory system and the gross method for recording purchase discounts, follow
these steps:
inventory for $33,600 , with terms 2/10, n/30. 7 Returned $3,000 of inventory
(damaged in shipment) to the supplier. 20 Paid $14,700 ( $15,000 of inventory
less discount of $300 ) on account. 30 Paid the remaining accounts payable
balance. Required Prepare journal entries for these transactions assuming the
company uses the perpetual inventory system and the gross method for
recording purchase discounts. Date Account Dr. Cr. April 5 CashAccounts
PayableAccounts ReceivableCost of Goods SoldDeferred RevenueFreight-
inInterest ExpenseInventoryOther ExpensesPurchase DiscountsPurchase
Returns and AllowancesPurchasesSales ReturnSales RevenueGain on Inventory
OverageLoss on Inventory ShortageN/A Answer 1 CashAccounts
PayableAccounts ReceivableCost of Goods SoldDeferred RevenueFreight-
inInterest ExpenseInventoryOther ExpensesPurchase DiscountsPurchase
Returns and AllowancesPurchasesSales ReturnSales RevenueGain on Inventory
OverageLoss on Inventory ShortageN/A Answer 2 To record purchase of
inventory April 7 CashAccounts PayableAccounts ReceivableCost of Goods
SoldDeferred RevenueFreight-inInterest ExpenseInventoryOther
, ExpensesPurchase DiscountsPurchase Returns and AllowancesPurchasesSales
ReturnSales RevenueGain on Inventory OverageLoss on Inventory
ShortageN/A Answer 3 CashAccounts PayableAccounts ReceivableCost of
Goods SoldDeferred RevenueFreight-inInterest ExpenseInventoryOther
ExpensesPurchase DiscountsPurchase Returns and AllowancesPurchasesSales
ReturnSales RevenueGain on Inventory OverageLoss on Inventory
ShortageN/A Answer 4 To record inventory return April 20 CashAccounts
PayableAccounts ReceivableCost of Goods SoldDeferred RevenueFreight-
inInterest ExpenseInventoryOther ExpensesPurchase DiscountsPurchase
Returns and AllowancesPurchasesSales ReturnSales RevenueGain
Answer & Explanation
To prepare the journal entries for CargoTranspo Inc. using the perpetual
inventory system and the gross method for recording purchase discounts, follow
these steps:
