A company purchased $2700 of merchandise on July 5 with terms 2/10, n/30. On July 7, it returned $650 worth of merchandise. On July 12, it paid the full amount due. Assuming the company uses a perpetual inventory system, and records purchases using the gross method, the correct journal entry to record the payment on July 12 is: Debit Accounts Payable $2050; credit Merchandise Inventory $41; credit Cash $2009. Debit Cash $2050; credit Accounts Payable $2050. Debit Accounts Payable $2700; credit Cash $2700. Debit Merchandise Inventory $2050; credit Cash $2050. Debit Accounts Payable $2050; credit Cash $2050.

Question

Business

Genesis Graham

13 August, 10:32

A company purchased $2700 of merchandise on July 5 with terms 2/10, n/30. On July 7, it returned $650 worth of merchandise. On July 12, it paid the full amount due. Assuming the company uses a perpetual inventory system, and records purchases using the gross method, the correct journal entry to record the payment on July 12 is: Debit Accounts Payable $2050; credit Merchandise Inventory $41; credit Cash $2009. Debit Cash $2050; credit Accounts Payable $2050. Debit Accounts Payable $2700; credit Cash $2700. Debit Merchandise Inventory $2050; credit Cash $2050. Debit Accounts Payable $2050; credit Cash $2050.

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Answers (2)

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Edwin Forbes · Answer 1

Debit Accounts Payable $2050; credit Merchandise Inventory $41; credit Cash $2009.

Explanation:

2.700 - 650 = 2,050 net sale

commercial term: 2/10 2% within the first 10 days

payment within discount period:

2,050 x 2% discount = 41

cash disbursement: 2,050 - 41 = 2,009

we will write-off the account payable

we credit cash by the disbusement amount

and credit inventory as his cost decreased.

Alec Carson · Answer 2

Debit Accounts Payable $2050; credit Merchandise Inventory $41; credit Cash $2009

Explanation:

The journal entry is as follows

On July 12

Account payable Dr $2,050

To Merchandise Inventory $41

To Cash $2,009

(Being the amount due is paid)

The computation is shown below:

For account payable

= $2,700 - $650

= $2,050

For merchandise inventory

= $2,050 * 2%

= $41

And, for cash it is

= $2,050 - $41

= $2,005