On June 10, Diaz Company purchased $8,000 of merchandise from Taylor Company

On June 10, Diaz Company purchased $8,000 of merchandise from Taylor Company, FOB shipping point, terms 2/10, n/30. Diaz pays the freight costs of $400 on June 11. Damaged goods totaling $300 are returned to Taylor for credit on June 12. The fair value of these goods is $70. On June 19, Diaz pays Taylor Company in full, less the purchased discount. Both companies use a perpetual inventory system.

Instructions

Prepare separate entries for each transaction on the books of Diaz Company.
Prepare separate entries for each transaction for Taylor Company. The merchandise purchased by Diaz on June 10 had cost Taylor $4,800.

Solution

Diaz Company
Journal Entries
(Perpetual Inventory System)

Taylor Company
Journal Entries
(Perpetual Inventory System)

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