Sample ProblemSample Problem

Chapter 8Chapter 8

Identifying the journals used to record purchases and related transactions.

The accounting system of Shoe City includes the following journals. Indicate which journal is used to record each transaction.

JOURNALSCash receipts journalCash payments journalPurchases journalSales journalGeneral journalTRANSACTIONS1. Purchased merchandise for $3,000; the terms are 2/10, n/30. 2. Returned damaged merchandise to a supplier and received a credit memorandum for $800. 3. Issued a check for $3,600 to a supplier as a payment on account. 4. Purchased merchandise for $2,000 plus a freight charge of $140; the supplier’s invoice is payable

in 30 days. 5. Received an allowance for merchandise that was damaged but can be sold at a reduced price; the

supplier’s credit memorandum is for $475. 6. Purchased merchandise for $3,500 in cash.

Transaction 1Transaction 1

Purchased merchandise for $3,000; the terms are 2/10, Purchased merchandise for $3,000; the terms are 2/10, n/30.n/30.

This transaction will be recorded in the purchases journal.This transaction will be recorded in the purchases journal.

*Note: the terms 2/10, n/30 mean that if the invoice is paid *Note: the terms 2/10, n/30 mean that if the invoice is paid within 10 days of the date there will be a 2% discount; within 10 days of the date there will be a 2% discount; otherwise, the total amount is due in 30 days.otherwise, the total amount is due in 30 days.

Transaction 2Transaction 2

Returned damaged merchandise to a supplier and received Returned damaged merchandise to a supplier and received a credit memorandum for $800.a credit memorandum for $800.

This transaction will be recorded in the general journal. It will This transaction will be recorded in the general journal. It will be a debit to Accounts Payable and a credit to Purchase be a debit to Accounts Payable and a credit to Purchase Returns and Allowances.Returns and Allowances.

Transaction 3Transaction 3

Issued a check for $3,600 to a supplier as payment on Issued a check for $3,600 to a supplier as payment on account.account.

This will be recorded in the Cash Payments Journal. The entry This will be recorded in the Cash Payments Journal. The entry will be a debit to Accounts Payable and a credit to Cash.will be a debit to Accounts Payable and a credit to Cash.

Transaction 4Transaction 4

Purchased merchandise for $2,000 plus a freight charge of Purchased merchandise for $2,000 plus a freight charge of $140; the supplier’s invoice is payable in 30 days.$140; the supplier’s invoice is payable in 30 days.

This entry will be recorded in the Purchases Journal as a debit This entry will be recorded in the Purchases Journal as a debit to purchases ($2,000), a debit to freight in ($140) and a to purchases ($2,000), a debit to freight in ($140) and a credit to Accounts Payable ($2,140).credit to Accounts Payable ($2,140).

Transaction 5Transaction 5

Received an allowance for merchandise that was damaged Received an allowance for merchandise that was damaged but can be sold at a reduced price; the supplier’s credit but can be sold at a reduced price; the supplier’s credit memorandum is for $475.memorandum is for $475.

This entry will be recorded in the General Journal. The entry This entry will be recorded in the General Journal. The entry will be a debit to Accounts Payable and a credit to Purchase will be a debit to Accounts Payable and a credit to Purchase Returns and Allowances.Returns and Allowances.

Transaction 6Transaction 6

Purchased merchandise for $3,500 in cash.Purchased merchandise for $3,500 in cash.

This entry will be recorded in the Cash Payments Journal with This entry will be recorded in the Cash Payments Journal with a debit to Purchases and a credit to Cash.a debit to Purchases and a credit to Cash.