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23 January, 01:57

Travis Company purchased merchandise on account from a supplier for $5,700, terms 2/10, net 30. Travis Company paid for the merchandise within the discount period. Under a perpetual inventory system, record the journal entries required for the above transactions. a. b.

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  1. 23 January, 02:52
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    Dr. Account Payable $5,700

    Cr. Discount Income $114

    Cr. Cash $5,586

    Explanation:

    Term 2/10, net/30 means there is a discount of 2% is available on payment of due amount within discount period of 10 days after purchase and net credit period of 30 days.

    According to given data

    Purchases = $5,700

    As the payment is made within discount period, so discount will be availed

    Discount = $5,700 x 2% = $114

    Amount to be paid = $5,700 - $114 = $5,586
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