Prepare Journals Entries for the Following, Assuming the Company Uses

question 79

Essay

Prepare journals entries for the following, assuming the company uses a perpetual inventory method and records purchases at their net amounts.
$$\begin{array} { | l | l | } \hline \text { June 1 } & \text { Purchased merchandise from Martin Company for } \$ 900 \text { with the terms of } 2 / 10 , \mathrm { n } / 30 . \\\hline \text { June 2 } & \text { Returned } \$ 100 \text { of the merchandise to the Martin Company. } \\\hline \text { June 4 } & \text { Purchased merchandise from the Elizabeth Company for } \$ 700 \text { with the terms of } 3 / 10 , \mathrm { n } / 30 . \\\hline \text { June 6 } & \text { Paid the amount owed to the Martin Company. } \\\hline \text { June 8 } & \text { Returned } \$ 50 \text { of the merchandise purchased from the Elizabeth Company. } \\\hline \text { June 12 } & \begin{array} { l } \text { Sold all of the merchandise on hand from the Martin Company for } \$ 1,060 \text { and collected } 8 \% \\\text { sales tax in addition to the sales price }\end{array} \\\hline \text { June 16 } & \text { Paid the amount owed to Elizabeth Company in full. } \\\hline\end{array}$$

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Definitions:

Common-value Auction

A type of auction wherein all bidders have the same valuation for the item for sale, but they have different information about the item’s actual value.

Exact Value

The precise numerical quantity or measurement without approximation.

Estimate

To make an approximate judgment or calculation of the value, number, quantity, or extent of something.

Winner's Curse

A phenomenon that occurs in auctions where the winning bidder pays more than what the item is actually worth, usually because of incomplete information or misjudgment.