Prepare journal entries to record each of the following purchases transactions of a merchandising company. Assume a perpetual inventory system.

Nov. 5

Purchased 600 units of product at a cost of $10 per unit. Terms of the sale are 2/10, n/60; the invoice is dated November 5.

Nov. 7 Returned 25 defective units from the November 5 purchase and received full credit.

Nov. 15 Paid the amount due from the November 5 purchase, less the return on November 7.

Inventory 6000 debit

Accounts Payable 6000 credit

--to record purchase--

Accounts Payable 250 debit

Inventory 250 credit

--to record returned goods--

Accounts Payable 5750 debit

Inventory 115 credit

Cash 5635 credit

--to record payment within discount--

Explanation:

We debit the inventory purchases and credit the debt we take

we purchase 600 at $10 each thus, 600 x 10 = $6,000 total purchased

Then, we return 25 untis Hence 25 x $10 = $250 credit received

Last, we detemrinate the net amount due considering we pay within discount date:

6000 - 250 = 5750 account payable balance

5750 x 2% = 115 discount received

5750 - 115 = 5635 cash outlay