Presented below is information related to Chilean Industries, Ltd.
1. On April 5, purchased merchandise from Graham Company, Ltd. for £17,400, terms 2/10, net/30, FOB shipping point.
2. On April 6, paid freight costs of £800 on merchandise purchased from Graham.
3. On April 7, purchased equipment on account from Reed Mfg., Ltd. for £27,000.
4. On April 8, returned merchandise, which cost £4,000, to Graham.
5. On April 15, paid the amount due to Graham in full.
Instructions
(a) Prepare the journal entries to record these transactions on the books of Chilean Industries, Ltd. using a periodic inventory system.
(b) Assume that Chilean Industries, Ltd. paid the balance due to Graham on May 4 instead of April 15. Prepare the journal entry to record this payment.