Presented here are selected transactions for Shaoshi Inc. during October of the current year. Shaoshi uses a perpetual inventory system.
Oct. 1 Purchased merchandise on account from Micron Ltd. at a cost of $86,000, terms 1/15, n/30, FOB shipping point.
1 Freight charges of $1,400 were paid by the appropriate party on the October 1 purchase of merchandise.
2 Returned for credit $4,000 of damaged goods purchased from Micron on October 1.
6 Purchased supplies for $2,800 cash.
8 Sold the remaining merchandise purchased from Micron to Guidant Corp. for $140,000 on account, terms 2/10, n/30, FOB destination.
9 Freight charges of $2,300 were paid by the appropriate party on the October 8 sale of merchandise.
10 Purchased equipment on account for $62,000.
12 Guidant returned damaged merchandise that was purchased on October 8 for a $3,500 credit on account. The merchandise originally cost $2,185 and was not restored to inventory.
15 Purchased merchandise for $36,300 cash.
17 Received the balance owing from Guidant.
28 Sold merchandise for $30,000 on account to Deux Ltée, terms 2/10, n/30, FOB shipping point. The merchandise had a cost of $18,000.
29 Freight charges of $750 were paid by the appropriate party on the October 28 sale of merchandise.
30 Paid Micron the balance owing.
31 Deux returned some of the merchandise that was purchased on October 28 for a $5,000 credit on account. The merchandise originally cost $3,000 and was restored to inventory.
Instructions
(a) Record the October transactions.
(b) Assume that Shaoshi took advantage of the 1% purchase discount offered by Micron Ltd. and paid Micron on October 14 rather than October 30. Record the entry that Shaoshi would make on October 14 and determine the cost of missing this purchase discount to Shaoshi.