Recording Purchase Transactions

Mathis Company and Reece Company use the perpetual inventory system. The following transactions occurred during the month of April:

On April 1, Mathis purchased merchandise on account from Reece with credit terms of 2/10, n/30. The selling price of the merchandise was $4,100, and the cost of the merchandise sold was $2,450. On April 1, Mathis paid freight charges of $100 cash to have the goods delivered to its warehouse. On April 8, Mathis returned $1,000 of the merchandise, which had originally cost Reece $700. On April 10, Mathis paid Reece the balance due. Required:

Question Content Area

1. Prepare the journal entry to record the April 1 purchase (ignore any freight charges) of merchandise by Mathis Company. If an amount box does not require an entry, leave it blank.

April 1 Inventory

Accounts Payable (Purchased inventory on account) Feedback Area Feedback Mathis is the buyer. From the buyer's perspective, the historical cost principle implies that inventory cost will include the purchase price of the inventory plus any cost of bringing the goods to a salable condition and location.

Question Content Area Prepare the journal entry to record the payment of freight on April 1. If an amount box does not require an entry, leave it blank.

April 1 Inventory 100

Cash 100 (Recorded the payment of freight charges) Feedback Area Feedback Mathis is the buyer. From the buyer's perspective, the historical cost principle implies that inventory cost will include the purchase price of the inventory plus any cost of bringing the goods to a salable condition and location.

Question Content Area 2. Prepare the journal entry to record the April 8 return of merchandise by Mathis. If an amount box does not require an entry, leave it blank.

April 8 Accounts Payable

Inventory (Returned merchandise) Feedback Area Feedback Mathis is the buyer. From the buyer's perspective, the historical cost principle implies that inventory cost will include the purchase price of the inventory plus any cost of bringing the goods to a salable condition and location.

Question Content Area 3. Prepare the journal entry to record the April 10 payment to Reece. If an amount box does not require an entry, leave it blank.

April 10 Accounts Payable 1,715

Cash 1,715

Inventory 35 (Paid accounts payable within discount period)