Reference no: EM132381603
Chapter 5 Checkpoint
Scooby Doo Company had the following transactions related to the purchase of merchandise inventory during May:
2 Purchased merchandise costing $8,000 on account from Velma Company, terms 1/15, n/30,
FOB Shipping Point. Scooby Doo paid $500 of shipping charges to Worlwide Shipping Company. 4 Returned damaged merchandise costing $900 to Velma for credit.
14 Purchased merchandise costing $9,200 on account from Shaggy Company, terms 2/10, n/30, FOB Destination. Shaggy paid $350 of shipping charges to Worlwide Shipping Company.
17 Paid the amount due to Velma Company.
18 Based on a competitoi's lower price, Shaggy Company agreed to reduce the cost of the merchandise purchased on May 14 by $800.
24 Paid Shaggy Company the amount due.
Scooby Doo Company maintains an accounts payable subsidiary ledger.
REQUIRED:
A. Give the general journal entries required to record the May transactions, assuming that Scooby Doo uses the perpetual inventory method.
B. What is the cost of goods purchased for May?
C. What would change if Scooby Doo did not pay Velma Company the amount due until May 31?