1. E5.2 (LO 2) Information related to Duff y Yachts is presented below.

1. On April 5, purchased merchandise on account from Thomas Nautical Supply for £25,000, terms
2/10, net/30, FOB shipping point.
2. On April 6, paid freight costs of £900 on merchandise purchased from Thomas.
3. On April 7, purchased equipment on account for £26,000.
4. On April 8, returned damaged merchandise to Thomas and was granted a £2,600 credit for returned
merchandise.
5. On April 15, paid the amount due to Thomas in full.
Instructions
a. Prepare the journal entries to record these transactions on the books of Duff y under a perpetual
inventory system.
b. Assume that Duff y paid the balance due to Thomas on May 4 instead of April 15. Prepare the
journal entry to record this payment

2. E5.4 (LO 2, 3) On June 10, York Gifts purchased £7,600 of merchandise from Bianchi Designs, FOB
shipping point, terms 2/10, n/30. York pays the freight costs of £400 on June 11. Damaged goods
totaling £300 are returned to Bianchi for credit on June 12. The fair value of these goods is £70. On
June 19, York pays Bianchi in full, less the purchase discount. Both companies use a perpetual
inventory system. Instructions a. Prepare separate entries for each transaction on the books of York. b.
Prepare separate entries for each transaction for Bianchi. The merchandise purchased by York on June
10 had cost Bianchi £4,300.

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