Answer:
Part A. Entries in Purcey Company:
On June 10:
Debit Merchandise $6,000
Credit Accounts Payable $6,000
On June 11:
Debit Freight in $430
Credit Cash $430
On June 12:
Debit Accounts Payable $700
Credit Merchandise $700
On June 19:
Debit Accounts Payable $5,300
Credit Purchase discount $159
Credit Cash $5,141
Part B. Entries in Guyer Company:
On June 10:
Debit Account Receivable $6,000
Credit Sales $6,000
Debit Cost of goods sold $2,430
Credit Merchandise $2,430
On June 12:
Debit Sales $700
Credit Account Receivable $700
Debit Merchandise $260
Credit Cost of goods sold $260
On June 19:
Debit Cash $5,141
Debit Sales Discount $159
Credit Account Receivable $5,300
Explanation:
Credit terms of 3/10, n/30 means that 3% discount for the payment within 10 days and the full amount to be paid within 30 days.
Part A. Entries in Purcey Company:
On June 10:
Debit Merchandise $6,000
Credit Accounts Payable $6,000
On June 11:
Debit Freight in $430
Credit Cash $430
On June 12:
Debit Accounts Payable $700
Credit Merchandise $700
On June 19:
Purcey pays and takes the appropriate discount:
3% x ($6,000 - $700) = $159
Cash Guyer Company receives: $5,300-$159 = $5,141
The journal entry that Purcey make:
Debit Accounts Payable $5,300
Credit Purchase discount $159
Credit Cash $5,141
Part B. Entries in Guyer Company:
On June 10:
Debit Account Receivable $6,000
Credit Sales $6,000
Debit Cost of goods sold $2,430
Credit Merchandise $2,430
On June 12:
Debit Sales $700
Credit Account Receivable $700
Debit Merchandise $260
Credit Cost of goods sold $260
On June 19:
Debit Cash $5,141
Debit Sales Discount $159
Credit Account Receivable $5,300
