A company purchased $2,800 of merchandise on July 5 with terms 3/10, n/30. On July 7, it returned $700 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:

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Business

Brennen Grimes

7 July, 06:07

A company purchased $2,800 of merchandise on July 5 with terms 3/10, n/30. On July 7, it returned $700 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:

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Brenton · Answer 1

Answer and Explanation:

The correct journal entry as on July 12 is shown below

Account payable ($2,800 - $700) $2,100

To Merchandise inventory $2,037

To Cash ($2,100 * 3%) $63

(Being the cash paid is recorded)

For recording this we debited the account payable as it decreased the liabilities and credited the merchandise inventory and cash as it also decreased the assets