Reference no: EM132480052
Question - During the month of April, Rainbow Company had the following transactions related to the purchase of merchandise inventory. Rainbow Company maintains an accounts payable subsidiary ledger.
Apr 3 Purchased $4,000 of merchandise on account from Blue Company, terms 2/10, n]30, FOB Shipping Point.
Apr 4 Rainbow paid $500 of shipping charges to Worldwide Shipping Company for the merchandise purchased on April 3 from Blue Company.
Apr 5 Blue Company agreed to reduce the purchase price of the merchandise purchased on April 3 by $300.
Apr 6 Purchased $6,000 of merchandise on account from Red Company, terms 1/15, n/30, FOB Destination. Red Company paid $800 of shipping charges to Worldwide Shipping Company.
Apr 7 Returned $1,000 of merchandise to Red Company for credit.
Apr 13 Paid Blue Company the amount due.
Apr 21 Paid Red Company the amount due.
Instructions -
(a) Prepare the general journal entries required to record the April transactions for Rainbow Company in the attached journal.
(b) Post your journal entries to the attached set of T-accounts.
(c) What is the cost of goods purchased for April?