Q5-2TI - Horngren'S Financial And Managerial Accounting

Question

Click Computers has the following transactions in July related to the purchase of merchandise inventory.

July 1 Purchase of \(20,500 worth of computers on account, terms of 2/10, n/30. 

        3 Return of \)4,000 of the computers to the vendor. 

        9 Payment made on the account. 

Journalize the purchase transactions for Click Computers assuming the company uses the perpetual inventory system.

Step-by-Step Solution

Answer

The total debit and credit for the journal are $41,000. 

Meaning of Perpetual Inventory System

The perpetual inventory system immediately records the sale and purchase of inventories through an electronic medium. This system requires computers and knowledge to record inventory-related transactions.

Preparation of journal entries

Date	Accounts and Explanation	Debit ($)	Credit ($)
July 1	Inventory	20,500
	Accounts payable		20,500
	(To record the purchase of computers)
July 3	Accounts payable	4,000
	Inventory		4,000
	(To record the return of goods)
July 9	Accounts payable	16,500
	Bank		16,170
	Inventory		330
	(To record the payment within the discount period)