Prepare journal entries to record the following merchandising transactions of Margin Company, which applies the perpetual inventory system and the gross method of recording invoices. Margin Company offers all of its credit customers credit terms of 2/10, n/30. May 1Purchased merchandise from Craft Company for $7,800 under credit terms of 1/10, n/30, FOB shipping point, invoice dated May 1.May 2 Purchased merchandise from Bow Company for $10,600 under credit terms 2/05, n/20, FOB destination.May 4 Paid $300 cash for the freight charges on the May 1 purchase of merchandise.May 5 Granted an $800 allowance from Craft Company for the return of part of the merchandise purchased on May 1.May 6 Paid Bow Company the balance due within the discount period.May 11 Paid Craft Company the balance
due within the discount period.
What will be an ideal response?
| May 1 | Merchandise Inventory | 7,800 | ? |
| ? | Accounts Payable-Craft Co. | ? | 7,800 |
| May 2 | Merchandise Inventory | 10,600 | ? |
| ? | Accounts Payable-Bow Co. | ? | 10,600 |
| May 4 | Merchandise Inventory | 300 | ? |
| ? | Cash | ? | 300 |
| May 5 | Accounts payable-Craft Co. | 800 | ? |
| ? | Merchandise inventory | ? | 800 |
| May 6 | Accounts payable-Bow Co. | 10,600 | ? |
| ? | Merchandise inventory ($10,600 * .02) | ? | 212 |
| ? | Cash ($10,600 - $212) | ? | 10,388 |
| May 11 | Accounts payable-Craft Co. ($7,800 - $800) | 7,000 | ? |
| ? | Merchandise inventory ($7,000 * .01) | ? | 70 |
| ? | Cash ($7,000 - $70) | ? | 6,930 |
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