Presented here are selected transactions for Norlan Inc. during September of the current year. Norlan uses a perpetual inventory system.
Sept. 2 Purchased equipment on account for $65,000, terms n/30, FOB destination.
3 Freight charges of $950 were paid by the appropriate party on the September 2 purchase of equipment.
4 Purchased supplies for $4,000 cash.
6 Purchased inventory on account from Hillary Corp. at a cost of $65,000, terms 1/15, n/30, FOB shipping point.
7 Freight charges of $1,600 were paid by the appropriate party on the September 6 inventory purchase.
8 Returned damaged goods costing $5,000 that were originally purchased from Hillary on September 4. Received a credit on account.
9 Sold goods costing $15,000 to Fischer Limited for $20,000 on account, terms 2/10, n/30, FOB destination.
10 Freight charges of $375 were paid by the appropriate party on the September 9 sale of inventory.
17 Received the balance due from Fischer.
20 Paid Hillary the balance due.
21 Purchased inventory for $6,000 cash.
22 Sold inventory costing $20,000 to Kun-Tai Inc. for $27,000 on account, terms n/30, FOB shipping point.
23 Freight charges of $500 were paid by the appropriate party on the September 22 sale of inventory.
28 Kun-Tai returned goods sold for $10,000 that cost $7,500. The merchandise was restored to inventory.
Instructions
(a) Record the September transactions on Norlan's books.
(b) Assume that Norlan did not take advantage of the 1% purchase discount offered by Hillary Corp. and paid Hillary on October 3 instead of September 20. Record the entry that Norlan would make on October 3 and determine the cost of missing this purchase discount to Norlan.