Question

requirements

1. journalize the purchase transactions. explanations are not required
2. in the final analysis, how much did the inventory cost kc toys?

requirement 1. journalize the purchase transactions. explanations are not required. (assume the company uses a perpetual inventory system. record debits first, then credits. exclude explanations from journal entries.)
aug 7 kc toys purchased $189,300 worth of megoblock toys on account with credit terms of 2/10, n/45
date accounts debit credit
aug 7 merchandise inventory 189,300
accounts payable - megoblock 189,300
aug 12 kc toys returned $18,850 of the merchandise to megoblock due to damage during shipment
date accounts debit credit
aug 12 18,850 18,850

Explanation:

Step1: Calculate net purchase amount

The initial purchase was $189,300 and the return was $18,850. The net - purchase amount before considering the discount is $189300 - 18850=170450$.

Step2: Determine if discount is applicable

The credit terms are 2/10, n/45. Since we are not given information about when the payment was made, assume the company takes the discount (if applicable). The discount amount is $170450\times0.02 = 3409$.

Step3: Calculate cost of inventory

The cost of inventory is the net - purchase amount minus the discount amount, so $170450-3409 = 167041$.

Answer:

$167,041$