Record the following transactions as general journal entries. Use the gross-price method.
Aug. 6
Purchased $830 of merchandise on account from Johnston Co. Credit terms 2/10, n/30.
8
Bought an $18,000 truck from Pillner Co., paying $3,000 down; balance on account.
13
Purchased $2,611 of merchandise for cash from Pillner and Co.
15
Paid for the August 6 purchase of merchandise from Johnston Co.
17
Purchased $1,743 of merchandise from Luis Co. Credit terms 2/10, n/30.
To record the given transactions as general journal entries using the gross-price method, we need to understand the general journal format and apply the relevant information provided in each transaction.
The general journal format typically includes the following columns:
- Date: The date of the transaction.
- Account Title: The name of the account affected by the transaction.
- Debit: The amount of the transaction affecting the account (recorded on the left side).
- Credit: The amount of the transaction affecting another account (recorded on the right side).
- Reference: Additional reference information related to the transaction.
Now, let's record each transaction:
Aug. 6:
Purchased $830 of merchandise on account from Johnston Co. Credit terms 2/10, n/30.
Analysis:
- We purchased merchandise on account, which means we will owe Johnston Co. for this transaction.
- The credit terms are 2/10, n/30, which means if we pay within 10 days, we will receive a 2% discount.
General Journal Entry:
Date: Aug. 6
Account Title Debit Credit
Merchandise Inventory $830
Accounts Payable $830
Reference: Purchase of merchandise on account from Johnston Co.
Aug. 8:
Bought an $18,000 truck from Pillner Co., paying $3,000 down; balance on account.
Analysis:
- We bought a truck from Pillner Co.
- We paid $3,000 as a down payment, and the remaining balance will be paid later.
General Journal Entry:
Date: Aug. 8
Account Title Debit Credit
Truck $18,000
Cash $3,000
Accounts Payable $15,000
Reference: Purchase of truck from Pillner Co., $3,000 paid as a down payment.
Aug. 13:
Purchased $2,611 of merchandise for cash from Pillner and Co.
Analysis:
- We purchased merchandise for cash from Pillner and Co.
General Journal Entry:
Date: Aug. 13
Account Title Debit Credit
Merchandise Inventory $2,611
Cash $2,611
Reference: Cash purchase of merchandise from Pillner and Co.
Aug. 15:
Paid for the August 6 purchase of merchandise from Johnston Co.
Analysis:
- We paid for the merchandise purchased on Aug. 6 from Johnston Co.
General Journal Entry:
Date: Aug. 15
Account Title Debit Credit
Accounts Payable $830
Cash $814.40 (calculated as $830 - (2% of $830))
Merchandise Inventory $15.60 (calculated as 2% of $830)
Reference: Payment for the August 6 merchandise purchase from Johnston Co.
Aug. 17:
Purchased $1,743 of merchandise from Luis Co. Credit terms 2/10, n/30.
Analysis:
- We purchased merchandise from Luis Co.
- The credit terms are 2/10, n/30, which means if we pay within 10 days, we will receive a 2% discount.
General Journal Entry:
Date: Aug. 17
Account Title Debit Credit
Merchandise Inventory $1,743
Accounts Payable $1,743
Reference: Purchase of merchandise on account from Luis Co.
These are the general journal entries for the given transactions using the gross-price method.