Reference no: EM133062696

Question 1 - Prepare journals entries for the following assuming the company uses a perpetual inventory method and records purchases at gross invoice price.

1 June Purchased goods from Martin Company for $900 with the terms of 2/10, n/30

2 June Returned $100 of the goods to Martin Company

4 June Purchased goods from Elizabeth Company for $700 with the terms of 3/10, n/30

6 June Paid the amount owed to Martin Company

8 June Returned $50 of the goods purchased from Elizabeth Company

12 June Sold all the goods on hand from Martin Company for $1,060 and collected 8% sales tax in addition to the sales price.

16 June Paid the amount owed to Elizabeth Company in full.

Question 2 - Phillips Co. is an office supply store. The company uses a perpetual inventory system, records purchase at net cost, and records sales revenue at gross invoice price.

Record the following transactions in the company's general journal. To conserve space, you may omit the written explanations which normally should accompany the entries.

1 July Purchased four Lorac copying machines on account from Lorac Corp. Total invoice price was $25,000 per machine ($100,000 total); terms of 2/10, n/30. These machines are intended for resale.

3 July Found one of the Lorac copiers to be defective and returned it to Lorac, thus reducing the amount owed.

9 July Sold one of the Lorac copiers to Morris Realty. The sales price was $35,000, terms 5/10, n/60.

10 July Paid the remaining amount owed to Lorac Corp., less the allowable discount.

19 July Received full payment from Morris, less the allowable discount.