Question

Cleveland Company purchased $2,700 of inventory on account from Pinto Industries on March 8th. The terms were 2/15, n/45. Cleveland also paid freight charges of $200 on March 9th and returned $450 of the inventory on March 13th. Journalize the entry to record the payment of the invoice on April 5th.

Answer 1

Solution:

Accounts Payable          $2900

Cash                                $2691

Inventory                         $209

Cleveland didn't pay during the discount period,  

So the amount due is $2,700 - 450 = $2,250

Cash was charged in freight charges prior to delivery of the invoice.