Purchase-Related Transactions

Warwick's Co., a women's clothing store, purchased $75,000 of merchandise from a supplier on account, terms FOB destination, 2/10, n/30. Warwick's returned $9,000 of the merchandise, receiving a credit memo, and then paid the amount due within the discount period.

a. Journalize Warwick's entry to record the purchase.

	Inventory
	Accounts Payable

Feedback

A purchase increases Inventory and Accounts Payable.

Learning Objective 2.

b. Journalize Warwick's entry to record the merchandise return.

	Accounts Payable
	Inventory

Feedback

c. Journalize Warwick's to record the payment within the discount period of ten days.

	Accounts Payable
	Cash

Feedback

The amount paid is the balance in Accounts Payable.

Learning Objective 2.

d. Journalize Warwick's to record the payment beyond the discount period of ten days. If an amount box does not require an entry, leave it blank.

	Accounts Payable
	Inventory
	Cash