On July 1, Corrao Company purchased $ 1 comma 500 of inventory on account with credit terms of 3 /10, net 30. Corrao Company uses the perpetual inventory system. On July 5, Corrao Company paid the amount due. What journal entry did they prepare on July 5?

Question

Business

Michael Simmons

8 June, 08:17

On July 1, Corrao Company purchased $ 1 comma 500 of inventory on account with credit terms of 3 /10, net 30. Corrao Company uses the perpetual inventory system. On July 5, Corrao Company paid the amount due. What journal entry did they prepare on July 5?

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Answers (1)

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Jade Richardson · Answer 1

Under the terms of 3/10, net 30, C Company will get a discount of $3 if it pays for the inventory purchased within 10 days from the date of purchase.

Therefore, the journal entry is as follows:

Accounts Payable A/c Dr. $1,500

To Inventory $3

To cash $1,497

(To record the payment of due amount)