Prepare General Journal entries to record the following perpetual system merchandising transactions of Belton Company. Use a separate account for each receivable and payable; example, record the purchase July 1 in Accounts Payable-Jones Company. Do the analysis component.
July 1, purchased merchandise from Jones Company for $14,800 under credit terms of 1 /15, n/30, FOB factory.
2 Sold merchandise to Terra Co. for $2,600 under credit terms of 2/10, n/60, FOB shipping point. The merchandise had cost $1,950.
3 Paid $450 for freight charges on the purchase of July 1.
8, Sold merchandise that cost $3,825 for $5,100 cash
9 Purchased merchandise from Keene Co. for $9,100 under credit terms of 2/15, n/60, FOB destination.
12 Received a $1,500 credit memorandum acknowledging the return of merchandise purchased on July 9.
12 Received the balance due from Terra Co. for the credit sale dated July 2.
13 Purchased office supplies from EastCo on credit, $960, n/30.
16 Paid the balance due to Jones Company.
19 Sold merchandise that cost $2,850 to Urban Co. for $3,800 under credit terms of 2/15, n/60, FOB shipping point.
21 Issued a $300 credit memorandum to Urban Co. for an allowance on goods sold on July 19.
22 Received a debit memorandum from Urban Co. for an error that overstated the total invoice by $200.
29 Paid Keene Co. the balance due
30 Received the balance due from Urban Co. for the credit sale dated July 19.
31 Sold merchandise that cost $7,500 to Terra Co. for $10,000 under credit terms of 2/10, n/60, FOB shipping point.
Analysis Component:
As the senior purchaser for Belton Company, you are concerned that the purchase discounts you have negotiated are not being taken advantage of by the accounts payable department. Calculate the cost of the lost discount regarding the July 9 purchase and explain to accounts payable when to take advantage of discounts (assume a 6% interest rate; round calculations to four decimal places).