The following transactions occurred between Eyr Pharmaceuticals and Alley Drug Stores during July of the current year: (Click the icon to view the transactions.) Required Journalize these transactions, first on the books of Alley Drug Stores, and second on the books of Eyr Pharmaceuticals. Both companies use the perpetual inventory system. First, let's prepare the entries for Alley Drug Stores. July 8. Alley purchased $31,000 of merchandise from Eyr on credit terms of 2/10, n/30, FOB shipping point. Separately, Alley paid freight in of $2,000. Eyr invoiced Alley for $31,000. These goods cost Eyr $19,000. We will record each element of this transaction separately. Start with recording the purchase on account. (Record debits first, then credits. Exclude explanations from journal entries.) Journal Entry Date Accounts Debit Credit July 8 Next, from the July 8th transaction, record the payment of the freight charges. Journal Entry Date Accounts Debit Credit July 8 Next, from the July 8th transaction, record the payment of the freight charges. Journal Entry Date Accounts Debit Credit July 8 July 11. Alley returned $3,800 of the merchandise purchased on July 8. Eyr issued a credit memo for this amount and returned the goods, in excellent condition, to inventory (cost $1,950). Journal Entry Date Accounts Debit Credit July 11 July 17. Alley paid $12,000 of the invoice amount owed to Eyr for the July 8 purchase. This payment included none of the freight charges. Alley took the purchase discount on the partial payment. Go ahead and record the payment on account. Journal Entry Date Accounts Debit Credit July 17 July 26. Alley paid the remaining amount owed to Eyr for the July 8 purchase. Journal Entry Date Accounts Debit Credit July 26 Now we will record the entries of Eyr Pharmaceuticals. July 8. Alley purchased $31,000 of merchandise from Eyr on credit terms of 2/10, n/30, FOB shipping point. Separately, Alley paid freight in of $2,000. Eyr invoiced Alley for $31,000. These goods cost Eyr $19,000. We will record each element of the transaction separately. Begin with the sale on account. Journal Entry Date Accounts Debit Credit July 8 Next, record the cost of goods sold for the July 8 sale on account. Journal Entry Date Accounts Debit Credit July 8 July 11. Alley returned $3,800 of the merchandise purchased on July 8. Eyr issued a credit memo for this amount and returned the goods, in excellent condition, to inventory (cost $1,950). Again, we will record each element of the return separately. First, record the sale portion of the merchandise return. Journal Entry Date Accounts Debit Credit July 11 Next, record the cost of goods sold portion of the merchandise return from July 11. Journal Entry Date Accounts Debit Credit July 11 July 17. Alley paid $12,000 of the invoice amount owed to Eyr for the July 8 purchase. This payment included none of the freight charges. Alley took the purchase discount on the partial payment. Journal Entry Date Accounts Debit Credit July 17 July 26. Alley paid the remaining amount owed to Eyr for the July 8 purchase. Journal Entry Date Accounts Debit Credit July 26 More Info July 8 Alley purchased $31,000 of merchandise from Eyr on credit terms of 2/10, n/30, FOB shipping point. Separately, Alley paid freight-in of $2,000. Eyr invoiced Alley for $31,000. These goods cost Eyr $19,000. 11 Alley returned $3,800 of the merchandise purchased on July 8. Eyr issued a credit memo for this amount and returned the goods, in excellent condition, to inventory (cost $1,950). 17 Alley paid $12,000 of the invoice amount owed to Eyr for the July 8 purchase. This payment included none of the freight charge. Alley took the purchase discount on the partial payment. 26 Alley paid the remaining amount owed to Eyr for the July 8 purchase. Print Done