Apparel purchased 90 new shirts and recorded a total cost of $2,644 determined as follows: Invoice cost $ 2,160 Shipping charges 194 Import taxes and duties 160 Interest (6.0%) on $2,160 borrowed from the bank to finance the purchase 130 $ 2,644 Required: Prepare the journal entry to record this purchase in the correct amount, assuming a perpetual inventory system.

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Business

Kendrick

24 May, 20:45

Apparel purchased 90 new shirts and recorded a total cost of $2,644 determined as follows: Invoice cost $ 2,160 Shipping charges 194 Import taxes and duties 160 Interest (6.0%) on $2,160 borrowed from the bank to finance the purchase 130 $ 2,644 Required: Prepare the journal entry to record this purchase in the correct amount, assuming a perpetual inventory system.

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Master · Answer 1

Merchandise inventory 2,514 debit

Accounts payable 2,160 credit

Cash 194 credit

Import tariff 160 credit

--to record the acquisition of imported inventory--

interest expense 130 debit

interest payable 130 credit

--to record accrued interest--

Explanation:

The inventory will enter the accounting as the sum of all necessary cost to acquired an leave it ready for use or sale. In this case, the freigth and tariff are necessary but, the interest don't Therefore, they will be declared costo fo the period