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The following transactions occurred in April and May. Both companies use a perpetual inventory system. Apr. 5 Carla Vista Company purchased merchandise from DeVito Company
The following transactions occurred in April and May. Both companies use a perpetual inventory system. Apr. 5 Carla Vista Company purchased merchandise from DeVito Company for $12,100, terms 2/10, 1/30, FOB shipping point. DeVito had paid $7,900 for the merchandise. 6 The correct company paid freight costs of $300. 8 Carla Vista Company returned damaged merchandise to DeVito Company and was given a purchase allowance of $1,600. DeVito determined the merchandise could not be repaired and sent it to the recyclers. The merchandise had cost DeVito $1,045. May 4 Carla Vista paid the amount due to DeVito Company in full. Date Account Titles and Explanation Debit Credit (Purchase on account.) (To record cash payment of freight) (To record purchase return.) Payment on account.) Date Account Titles and Explanation Debit Credit (To record sales on account.) (To record cost of goods sold.) (To record credit for goods returned.) (Collection on account.)
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