Question

Goods costing $2,300 are purchased on account on July 15 with credit terms of 2/10, n/30. On July 18, a $100 credit memo is received from the supplier for damaged goods. Give the journal entry on July 24 to record payment of the balance due within the discount period using a perpetual inventory system

Answer 1

The journal entry on July 24 to record payment of the balance due is $2156

What is Discount Period ?

Discount period is the time period given by the supplier to the consumer for getting discount if the payment is made by the due date.

                                                                          Debit                          Credit

Accounts payable (2300-100 )                       2200

Cash (2200 - (2200* 2%))                                                                   2156

Purchase Discount / Merchandise Inventory                                     44

To record the payment of accounts within discount period

Amount Paid = 2300 - 200 -44 = 2156

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