Recording Purchases-Perpetual System

On July 1, Alvarez, Inc. purchased merchandise for $3,800 with terms of 2/10, n/30. On July 5, the firm returned $800 of the merchandise to the seller. Payment of the account occurred on July 8. Alvarez uses the perpetual inventory system.

Required

a. Prepare the journal entries for July 1, July 5, and July 8.

General Journal
Date		Description	Debit	Credit
July	1	AnswerAccounts PayableCash Inventory	Answer	Answer
		AnswerAccounts Payable Cash Inventory	Answer	Answer
		To record purchase of merchandise, terms 2/10, n/30.
	5	AnswerAccounts Payable Cash Inventory	Answer	Answer
		AnswerAccounts Payable Cash Inventory	Answer	Answer
		To record returned merchandise.
	8	Answer Accounts Payable Cash Inventory	Answer	Answer
		Answer Accounts PayableCash Inventory	Answer	Answer
		Cash	Answer	Answer
		To record the paid amount due within the discount period for the July 1 purchase.

b. Assuming that the account was paid on July 14, prepare the journal entry for payment on that date.

General Journal
Date		Description	Debit	Credit
July	14	AnswerAccounts PayableCash Inventory	Answer	Answer
		AnswerAccounts PayableCash Inventory	Answer	Answer
		To record the paid amount due on the July 1 purchase.