Roley Corporation uses a periodic inventory system and the gross method of accounting for purchase discounts. A. On July 1, Roley purchased $60,000 of inventory, terms 2/10, n/30, FOB shipping point. Roley paid freight costs of $1,200.
B. On July 3, Roley returned damaged goods and received credit of $6,000.
C. On July 10, Roley paid for the goods.
Prepare all necessary journal entries for Roley.

Please  see answers in explanation column

Explanation:

1A)To record amount payable for purchase of goods

DateAccount Title                   Debit                  Credit

July 1Purchase                  $60,000  

         Accounts Payable                                 $60,000

 Freight in                                 $1,200  

                   Cash                                                         $1,200

B)To record amount on damaged goods

DateAccount Title                   Debit                              Credit  

July 3Accounts Payable           $6,000  

             Return of Purchase                               $6,000

C)Journal to record payment of goods

DateAccount Title                   Debit                  Credit  

July 10Accounts Payable    $54,000  

Purchase Discount  $1,080

Cash   $52,920

Calculations

Accounts payable Purchased  Price - price of returned goods = 60000-6000 = $54,000

Discount on Purchases if paid within 10 days = 2% x $54,000 = $1,080

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