1. Sample Problem
Chapter 8

2. 4
Identifying the journals used to record purchases and related transactions.
The accounting system of Shoe City includes the following journals. Indicate which journal is used to record each transaction.
JOURNALS
Cash receipts journal
Cash payments journal
Purchases journal
Sales journal
General journal
TRANSACTIONS
Purchased merchandise for $3,000; the terms are 2/10, n/30.
Returned damaged merchandise to a supplier and received a credit memorandum for $800.
Issued a check for $3,600 to a supplier as a payment on account.
Purchased merchandise for $2,000 plus a freight charge of $140; the supplier’s invoice is payable in 30 days.
Received an allowance for merchandise that was damaged but can be sold at a reduced price; the supplier’s credit memorandum is for $475.
Purchased merchandise for $3,500 in cash.

3. Transaction 1
Purchased merchandise for $3,000; the terms are 2/10, n/30.
This transaction will be recorded in the purchases journal.
*Note: the terms 2/10, n/30 mean that if the invoice is paid within 10 days of the date there will be a 2% discount; otherwise, the total amount is due in 30 days.

4. Transaction 2
Returned damaged merchandise to a supplier and received a credit memorandum for $800.
This transaction will be recorded in the general journal. It will be a debit to Accounts Payable and a credit to Purchase Returns and Allowances.

5. Transaction 3
Issued a check for $3,600 to a supplier as payment on account.
This will be recorded in the Cash Payments Journal. The entry will be a debit to Accounts Payable and a credit to Cash.

6. Transaction 4
Purchased merchandise for $2,000 plus a freight charge of $140; the supplier’s invoice is payable in 30 days.
This entry will be recorded in the Purchases Journal as a debit to purchases ($2,000), a debit to freight in ($140) and a credit to Accounts Payable ($2,140).

7. Transaction 5
Received an allowance for merchandise that was damaged but can be sold at a reduced price; the supplier’s credit memorandum is for $475.
This entry will be recorded in the General Journal. The entry will be a debit to Accounts Payable and a credit to Purchase Returns and Allowances.

8. Transaction 6 Purchased merchandise for $3,500 in cash.
This entry will be recorded in the Cash Payments Journal with a debit to Purchases and a credit to Cash.