Q20E Howie Jewelers had the following... [FREE SOLUTION]

Chapter 5: Q20E (page 300)

Howie Jewelers had the following purchase transactions. Journalize all necessary transactions. Explanations are not required.
Jun. 20 Purchased inventory of $5,100 on account from Sanders Diamonds, a jewelry importer. Terms were 2/15, n/45, FOB shipping point.
20 Paid freight charges, $400.
Jul. 4 Returned $600 of inventory to Sanders.
14 Paid Sanders Diamonds, less return.
16 Purchased inventory of $3,500 on account from Southboro Diamonds, a jewelry importer. Terms were 2/10, n/EOM, FOB destination.
18 Received a $300 allowance from Southboro Diamonds for damaged but usable goods.
24 Paid Southboro Diamonds, less allowance, and discount.

Short Answer

Expert verified

The total of debits and credits is$18,036.

Step by step solution

Meaning of Purchase Transactions

In accounting, purchase transactions refer to the events that bring the goods in. Under this process, a business concern acquiresgoods from the supplier to resell them to generateprofits.

Preparation of journal entries

Date	Accounts and Explanation	Debit ($)	Credit ($)
Jun 20	Merchandise inventory	5,100
	Accounts payable		5,100
Jun 20	Freight expenses	400
	Cash		400
Jul 4	Accounts payable	600
	Merchandise inventory		600
Jul 14	Accounts payable (5100-600)	4,500
	Cash		4,500
Jul 16	Merchandise inventory	3,500
	Accounts payable		3,500
Jul 18	Accounts payable	300
	Merchandise inventory		300
Jul 24	Accounts payable (3200-3200*2%)	3,136
	Cash		3,136