journalize purchase transactions

[logistic_guy]

here is the question

This information relates to Nandi Co.

1. On April \(\displaystyle 5\), purchased merchandise from Dion Company for \(\displaystyle \$25,000\), terms \(\displaystyle 2/10\), net\(\displaystyle /30\), FOB shipping point.
2. On April \(\displaystyle 6\), paid freight costs of \(\displaystyle \$900\) on merchandise purchased from Dion Company.
3. On April \(\displaystyle 7\), purchased equipment on account for \(\displaystyle \$30,000\).
4. On April \(\displaystyle 8\), returned some of April \(\displaystyle 5\) merchandise, which cost \(\displaystyle \$2,800\), to Dion Company.
5. On April \(\displaystyle 15\), paid the amount due to Dion Company in full.

(a) Prepare the journal entries to record these transactions on the books of Nandi Co. using a periodic inventory system.
(b) Assume that Nandi Co. paid the balance due to Dion Company on May \(\displaystyle 4\) instead of April \(\displaystyle 15\). Prepare the journal entry to record this payment.


myattemb
i understand in periodic inventory system the purchaser get the debit, so first entry

April \(\displaystyle 5\)
Purchases: \(\displaystyle \$25,000\) Debit
Account Payable: \(\displaystyle \$25,000\) Credit

on second entry, it don't say it paid cash or other method. if i assume cash, do cash go debit or credit? i'm already confused from second entry

do the idea of part (a) Nandi Co. pay early it get discount?
do the idea of part (b) Nandi Co. pay late so it pay more because the terms say last day April \(\displaystyle 30\)?

 

[logistic_guy]

2. On April \(\displaystyle 6\), paid freight costs of \(\displaystyle \$900\) on merchandise purchased from Dion Company.

Date​	Account​	Debit​	Credit​
6​	Freight-In​	900​	​
​	Cash​	​	900​

 

[logistic_guy]

3. On April \(\displaystyle 7\), purchased equipment on account for \(\displaystyle \$30,000\).

Date​	Account​	Debit​	Credit​
7​	Equipment​	30,000​	​
​	Accounts Payable​	​	30,000​

 

[logistic_guy]

4. On April \(\displaystyle 8\), returned some of April \(\displaystyle 5\) merchandise, which cost \(\displaystyle \$2,800\), to Dion Company.

Date​	Account​	Debit​	Credit​
8​	Accounts Payable​	2,800​	​
​	Purchase returns and allowances​	​	2,800​

 

[logistic_guy]

Now is the fun part of the problem!

On April \(\displaystyle 5\), Nandi Co. purchased merchandise for \(\displaystyle \$ 25,000\), but on April \(\displaystyle 8\), it returned some of the merchandise which cost \(\displaystyle \$ 2,800\). So, Nandi Co. owes Dion Company only \(\displaystyle \$ 22,200\). That was not the end as the terms of purchase gives Nandi Co. \(\displaystyle 2\%\) off if it pays within \(\displaystyle 10\) days, and it indeed did.

Therefore, Nandi Co. owes Dion Company \(\displaystyle \$ 21,756\) after the discount \(\displaystyle (\$ 444)\). And the journal entry is:

5. On April \(\displaystyle 15\), paid the amount due to Dion Company in full.

Date​	Account​	Debit​	Credit​
15​	Accounts Payable​	22,200​	​
​	Purchase Discount​	​	444​
​	Cash​	​	21,756​

 

[jonah2.0]

Beer drenched googling follows.

Google Search

In particular,

This information relates to Nandi Co

This information relates to Nandi Co

www.mathlearningcentre.com

 

[logistic_guy]

\(\displaystyle \bold{(b)}\)

All the journal entries will be the same except the last one. Since Nandi. Co. will get no discount this time, the last journal will be:

5. On May \(\displaystyle 4\), paid the amount due to Dion Company in full.

Date​	Account​	Debit​	Credit​
4​	Accounts Payable​	22,200​	​
​	Cash​	​	22,200​