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5 March, 09:23

Goods costing $1,900 are purchased on account on July 15 with credit terms of 2/10, n/30. On July 18, the purchaser receives a $300 credit from the supplier for damaged goods. Give the journal entry on July 24 to record payment of the balance due within the discount period

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  1. 5 March, 12:29
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    The journal entry is shown below:

    Accounts payable A/c Dr $1,600

    To Cash A/c $1,568

    To Merchandise Inventory A/c $32

    (Being due amount is paid and the remaining balance is credited to the cash account)

    The computation is shown below:

    For account payable

    = Purchase value of goods - credit from the supplier for damaged goods

    = $1,900 - $300

    = $1,600

    For discount

    = $1,600 * 2%

    = $32

    We assume the perpetual inventory method is followed
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