On October 23, Johnson Company purchased $100,000 of inventory on credit with payment terms of 1/15, net 45.

Required:

Using the net price method, prepare journal entries to record Johnsons purchase on October 23 and the subsequent payment on November 30.

CHART OF ACCOUNTS

Chapter 7

General Ledger

	ASSETS
111	Cash
121	Accounts Receivable
141	Inventory
142	Allowance for Inventory Valuation
152	Prepaid Insurance
181	Equipment
198	Accumulated Depreciation

	LIABILITIES
211	Accounts Payable
231	Salaries Payable
241	Accrued Loss on Purchase Commitment
251	Unearned Revenue

	EQUITY
311	Common Stock
331	Retained Earnings

	REVENUE
411	Sales Revenue

	EXPENSES
500	Cost of Goods Sold
510	Purchases
511	Purchase Returns and Allowances
512	Purchase Discounts Taken
513	Purchase Discounts Lost
514	Loss on Purchase Commitment
515	Recovery of Accrued Loss on Purchase Commitment
521	Insurance Expense
522	Utilities Expense
523	Salaries Expense
524	Bad Debt Expense
540	Interest Expense
541	Depreciation Expense
559	Miscellaneous Expenses

Using the net price method, prepare journal entries to record Johnsons purchase on October 23 and the subsequent payment on November 30. Johnson Company uses a perpetual inventory system.

PAGE 9

GENERAL JOURNAL

	DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT
1
2
3
4
5