Question

Grant Manufacturing purchased $10,000 of merchandise inventory on account from a vendor and was billed $300 for freight. The credit terms are 2/10, n/30. Because some of the merchandise was not what was ordered, Grant Manufacturing returned $2,000 the same day. Grant Manufacturing uses the perpetual inventory system and made payment for the merchandise, less the return, within the discount period. The journal entry to record the payment after the return within the discount period would be:

Answer 1

Explanation:

The journal entry is shown below:

Accounts Payable A/c Dr $8,300              

                  To Cash A/c  $8,140

                  To Merchandise Inventory A/c $160       ($8,000 × 2%)

(Being the purchase of merchandise is recorded)

The computation is shown below:

For account payable

= $10,000 + $300 - $2000

= $8,300

For cash account

= $8,300 - $160

=$8,140