A. Prepare journal entries to record the following transactions of Recycled Fashion retail store. Recycled Fashion uses a perpetual inventory system and the gross method
Mar. 3 Purchased $1,150 of merchandise made from recycled material from GreenWorld Company with credit terms of 2/15, n/60, invoice dated March 3, and FOB shipping point.
4 Paid $75 cash for shipping charges on the March 3 purchase.
5 Returned to GreenWorld unacceptable merchandise that had an invoice price of $150.
18 Paid GreenWorld for the March 3 purchase, net of the discount and the returned merchandise.
19 Purchased $425 of fair trade merchandise from PeopleFirst Corp. with credit terms of 1/10, n/30, invoice dated March 19, and FOB destination.
21 After negotiations, received from PeopleFirst a $25 allowance (for scuffed merchandise) toward the $425 owed on the March 19 purchase.
29 Sent check to PeopleFirst paying for the March 19 purchase, net of the allowance and the discount.

Based the appropriate journal entries to record the transactions are:

Recycled Fashion journal entries

March 3

Debit Merchandise inventory $1,150

Credit Account payable- GreenWorld Company   $1,150

March 4

Debit Merchandise inventory $75

Credit Cash $75

March 5

Debit Account payable- GreenWorld Company $150

Credit  Merchandise inventory $150

March 18

Debit  Account payable- GreenWorld Company $1,000

($1,150-$150)

Credit  Merchandise inventory $20

(2%×$1,000)

Credit Cash $980

[$1,000×(100%-2%)]

March 19

Debit  Merchandise inventory $425

Credit Account payable-PeopleFirst Corp $425

March 21

Debit  Account payable-PeopleFirst Corp $25

Credit  Merchandise inventory $25

March 29

Debit  Account payable- PeopleFirst Corp $400

($425-$25)

Credit  Merchandise inventory $4

[($425-$25)×1%]

Credit Cash $396

[$400×(100%-1%)]

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