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22 June, 03:10

Piere Imports uses the perpetual system in accounting for merchandise inventory and had the following transactionsduring the month of October. Prepare entries to record these transactions assuming that Piere Imports records invoices (a) at gross amounts and (b) at net amounts. Oct 2 Purchased merchandise at a $3,000 price, invoice dated October 2, terms 2/10, n / 30.10 Received a $500 credit memorandum (at full invoice price) for the return of merchandise that it purchased on October217 Purchased merchandise at a $5,400 price, invoice dated October 16, terms 2/10, n/30.26 Paid for the merchandise purchased on October 17, less the discount31 Paid for the merchandise purchased on October 2 Payment was delayed because the invoice was mistakenly filed forpayment today. This error caused the discount to be lost

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  1. 22 June, 04:19
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    If records invoices at gross amounts

    October 2th

    inventory 3,000 debit

    A/P 3,000 credit

    October 2nd

    A/P 500 debit

    inventory 500 credit

    October 17th

    inventory 5,400 debit

    A/P 5,400 credit

    October 26th

    A/P 5,400 debit

    Inventory 108 credit

    cash 5,292 credit

    October 31th

    A/P 2,500 debit

    Cash 2,500 credit

    If records invoices at nets amounts

    October 2th

    inventory 2,940 debit

    A/P 2,940 credit

    October 2nd

    A/P 490 debit

    inventory 490 credit

    October 17th

    inventory 5,292 debit

    A/P 5,292 credit

    October 26th

    A/P 5,292 debit

    cash 5,292 credit

    October 31th

    A/P 2,490 debit

    Inventory 10 debit

    Cash 2,500 credit

    Explanation:

    gross amount: we use the invoice nominal

    net amount: we use the net nominal

    October 2nd net:

    3,000 x (1-2%) = 2,940

    returns net: 500 x (1 - 2%) = 490

    October 16th invoice net:

    5,400 x (1 - 2%) = 5,292

    october 31th

    october 2th invoice balance:

    2,940 - 490 = 2,450
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