Prepare General Journal entries to record the following perpetual system merchandising transactions of Lyryx Company. Use a separate account for each receivable and payable; for example, record the purchase on May 2 in Accounts Payable-Mobley Co.
May 2, Purchased merchandise from Mobley Co. for $18,000 under credit terms of 1 /15, n/30, FOB factory.
4 Sold merchandise to Cornerstone Co. for $3,400 under credit terms of 2/10, n/60, FOB shipping point. The merchandise had cost $2,100.
4 Paid $750 for freight charges on the purchase of May 2.
9 Sold merchandise that cost $3,600 for $5,200 cash.
10 Purchased merchandise from Richter Co. for $7,300 under credit terms of 2/15, n/60, FOB destination.
12 Received a $600 credit memorandum acknowledging the return of merchandise purchased on May 10.
14 Received the balance due from Cornerstone Co. for the credit sale dated May 4.
15 Sold for cash a piece of office equipment at its original cost, $1,200.
17 Paid the balance due to Mobley Co.
18 Purchased $1,750 of cleaning supplies from A & Z Suppliers; terms n/15.
20 Sold merchandise that cost $2,700 to Harrill Co. for $3,900 under credit terms of 2/15, n/60, FOB shipping point.
22 Issued a $500 credit memorandum to Harrill Co. for an allowance on goods sold on May 20.
23 Received a debit memorandum from Harrill Co. for an error that overstated the total invoice by $150.
25 Paid Richter Co. the balance due
31 Received the balance due from Harrill Co. for the credit sale dated May 20.
31 Sold merchandise that cost $10,200 to Cornerstone Co. for $15,000 under credit terms of 2/10, n/60, FOB shipping point.
Analysis Component:
You are working in Lyryx's accounts payable department and have been instructed to pay the Richter account on the last day of the discount period even though the money will have to be borrowed at 6% interest. Why would the company borrow to pay within the discount period? Show your calculations (round to two decimal places).