Prepare the Journal Entries in Big's Books to Record the Following

question 132

Essay

Prepare the journal entries in Big's Books to record the following transactions using the perpetual inventory system:
October 1 Big Inc. purchased $5,400 of merchandise on account from Bargain Inc., terms 3/15, n/45,
FOB shipping point. Bargain prepaid the $125 shipping cost and added the amount to the invoice.
October 4 Big sold $950 (cost, $250) of merchandise on account to Wills Corp., terms 2/10
n/45, FOB destination.
October 5 Big paid $25 freight charges to deliver goods to Wills.
October 8 Big returned $600 of the merchandise purchased on October 1 and received a credit.
October 11 Paid Bargain the amount due from the October 1 purchase in full.
October 12 Wills returned $175 (cost, $100) of merchandise from the October 4 sale.
October 13 Received payment in full from Wills for the October 4sale.

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Definitions:

Unconscionable

Actions or terms in a contract that are so unjust or overwhelmingly one-sided that they shock the conscience or are deemed unfair by law.

Subject to the Equities

A legal principle that means a transaction or property is dependent on or subject to any existing equities or claims against it.

Punitive Damages

Monetary compensation awarded to a plaintiff, over and above actual damages, intended to punish the defendant for particularly harmful behavior.

Fraudulent Misrepresentation

A false statement made knowingly, without belief in its truth, or recklessly, to induce another party to enter into a contract.