Purchase-Related Transactions

Warwicks Co., a women's clothing store, purchased $27,000 of merchandise from a supplier on account, terms FOB destination, 2/10, n/30. Warwicks returned $4,100 of the merchandise, receiving a credit memo, and then paid the amount due within the discount period.

a. Journalize Warwicks Co.'s entry to record the purchase.

	Merchandise Inventory
	Accounts Payable

a. A purchase increases Merchandise Inventory and Accounts Payable.

b. Journalize Warwicks Co.'s entry to record the merchandise return.

	Accounts Payable
	Merchandise Inventory

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b. A return reduces Merchandise Inventory and Accounts Payable in the purchaser's records.

c. Journalize Warwicks Co.'s entry to record the payment.

	Accounts Payable
	Cash