Answer:
The journal entry would be as follows:
Debit Credit
Accounts payable $395,000
Cash $391,050
Inventory $3,950
Explanation:
In order to prepare the journal entry would Northwest record for the payment made on March 17, 2020, we have to calculate according to the given data the following:
Northwest Co. purchased $400,000 in merchandise on account with credit terms of 1/15, n/45, and Merchandise with an invoice amount of $5,000 was returned for credit on March 12, 2020, hence, ross amount due = Amount of purchase - return = $400,000-$5,000 = $395,000 will be debited to Accounts payable
.
Discount will be allowed as payment made within 15 dyas
, hence Discount will be = 1% of $395,000 = $3,950 which will be credited to inventory
.
Net amount paid will be credit to cash = $395,000-$3,950 = $391,050.
Therefore, the journal entry would be as follows:
Debit Credit
Accounts payable $395,000
Cash $391,050
Inventory $3,950
