Prepare stellar stores journal entries

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Reference no: EM131225217

Stellar Stores is a new company that started operations on March 1, 2014. The company has decided to use a perpetual inventory system. The following purchase transactions occurred in March:

Mar. 1 Stellar Stores purchases $9,000 of merchandise for resale from Octagon Wholesalers terms 2/10, n/30, FOB shipping point.
2 The correct company pays $155 for the shipping charges.
3 Stellar returns $1,000 of the merchandise purchased on March 1 because it was the wrong colour. Octagon gives Stellar a $1,000 credit on its account
21 Stellar Stores purchases an additional $13,000 of merchandise for resale from Octagon Wholesalers terms 2/10, n/30, FOB destination.
22 The correct company pays $170 for freight charges.
23 Stellar returns $400 of the merchandise purchased on March 21 because it was damaged.
Octagon gives Stellar a $400 credit on its account.
30 Stellar paid Octagon the amount owing for the merchandise purchased on March 1.
31 Stellar paid Octagon the amount owing for the merchandise purchased on March 21.

Instruction

Prepare Stellar Stores' journal entries to record the above transactions.

Post the transactions to the merchandise inventory account. Compare the total in this account with the total of the cash paid during March by Stellar for the purchase of inventory.

Reference no: EM131225217

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