Unit 6 Merchandising Activities Recording Purchases Unit 6 Merchandising Activities Transaction Net Cost Method Gross Cost Method 5/ 4 Purchase of merchandise on credit. Inventory 3,920 AP 3,920 Inventory 4,000 AP 4,000 5/ 6 Freight Costs on purchases. Inventory 50 Cash 50 Inventory 50 5/8 Return unsatisfactory Merchandise AP 490 Inventory 490 (with disc.) AP 500 Inventory 500 (w/o disc.) 5/ 9 Payment on account within a discount period. AP 3,920 Cash 3,920 AP 4,000 Cash 3,920 Purch. Disc Taken 80 5/9 Failed to make payment w/in discount period. AP 3,920 Purch. Disc. Lost 80 Cash 4,000 AP 4,000

Unit 6 Merchandising Activities Recording Sales Unit 6 Merchandising Activities Transaction 5/ 4 Sale of merchandise on credit. Accounts Receivable 4,000 Sales 4,000 Cost of Goods Sold 2,000 Inventory 2,000 5/ 6 Return of merchandise sold Sales Returns & Allowances 500 AR 500 Inventory 250 Cost of Goods Sold 250 5/8 Cash received on account within a discount. Cash 3,920 Sales Discount 80 AR 4,000 5/9 Cash received after discount period. Cash 4,000 AR 4,000 Delivery Expenses Delivery Expense 50 Cash 50