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Q5-2TI

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Horngren'S Financial And Managerial Accounting
Found in: Page 260

Short Answer

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.

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

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Step by Step Solution

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)

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