E7-2

(Accounting for inventory purposes)

Baymont Corporation purchased inventory on account on March 3, 1997, for a gross price of

$50,000. The company purchased additional inventory on account on March 10, 1997, for a gross price of $140,000. The terms of both sales were 3/12, n/30. Baymont Corporation paid for the first purchase on April 25, 1997, and for the second purchase on March 20, 1997. The company prepares monthly adjusting journal entries and uses the perpetual inventory method.

REQUIRED:

Prepare journal entries for each transaction.

The following information was extracted from the financial records of House Designs.