Question

A buyer uses a periodic inventory system, and on December 5, it purchases $4,000 of merchandise on credit terms of 2/10, n/30. Complete the journal entry by selecting the account names from the drop-down menus and entering the dollar amounts in the debit or credit columns.

Answer 1

Answer:

The journal entry is shown below:

Explanation:

The journal entry for the following will be as:

Accounts Payable A/c.......................Dr   $4,000

       Merchandise Inventory A/c..........Cr   $80

       Cash A/c..............................................Cr  $3,920

As the buyer purchases merchandise worth $4,000, so the accounts payable account is debited and the buyer will be applied a discount of 2%, so merchandise inventory is credited and against the cash is paid, so the cash account is credited.

Working Note:

Discount = Amount × 2%

= $4,000  × 2%

= $80