During the month of June, Ace Incorporated purchased goods from two suppliers. The sequence of events was as follows: June 3 Purchased goods for $4,100 from Diamond Inc. with terms 2/10, n/30. 5 Returned goods costing $1,100 to Diamond Inc. for credit on account. 6 Purchased goods from Club Corp. for $1,000 with terms 2/10, n/30. 11 Paid the balance owed to Diamond Inc. 22 Paid Club Corp. in full. Required: Prepare journal entries to record the transactions, assuming Ace records discounts using the gross method in a perpetual inventory system. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

Answer and Explanation:

The journal entries are shown below:

On June 3

Merchandise Inventory$4,100

                   To Accounts payable $4,100

(Being the purchase of goods on credit is recorded)  

On Jun 5

Accounts payable$1,100  

         To Merchandise   Inventory  $1,100

(To record purchase returns)  

On June 6

Merchandise Inventory$1,000

     Accounts payable  $1,000

(Being the purchase of goods on credit is recorded)  

On June 11

Accounts payable ($4,100 - $1,100)$3,000

               To Cash  $2,960

               To  Inventory ($4,100 - $1,100) × 2%  $60

(Being the payment is recorded)  

On June 22

Accounts Payable$2,000     ($3,000 - $1,000)

    To Cash  $2,000

(Being the payment on account in full is paid)

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