Fundamentals of Financial Accounting 4th Edition by Fred Phillips,Robert Libby,Patricia Libby

Exercise 91

Accounting for Inventory Purchase Transactions including Allowances and Discounts Using a Perpetual Inventory System
Use the information in CP6-6 (page 291 in Chapter 6) to complete the following requirements.
Required:
1. Indicate the effect (direction and amount) of each transaction on the Inventory balance of American Fashions.
2. Prepare the journal entries that American Fashions would record and show any computations.
TIP: The selling price charged by the seller is the purchaser's cost.