Question

Jello's Market purchased $1,000 of goods on account with terms of 2/10,n/30. They returned $200 of the goods due to defect the next day. If Jello pays for the purchase within the discount period and uses the perpetual inventory system, the required journal entry to record the payment would: debit Accounts Payable $800; credit Merchandise Inventory $16; and credit Cash $784 debit Accounts Payable $800; credit Cash $780; and credit Merchandise Inventory $20 debit Accounts Payable $1,000; credit Cash 980; and credit Purchase Discounts $20 debit Accounts Payable $800 and credit Cash $800

Answer 1

Answer:

debit Accounts Payable $800; credit Merchandise Inventory $16; and credit Cash $784

Explanation:

Since Jello's Market purchased $1,000 of goods on account with terms of 2/10,n/30, and they returned $200 of the goods due to defect the next day.

Since the goods are paid fr the next day, if falls within the settlement for discount date which is 2% within 10 days

If Jello pays for the purchase within the discount period and uses the perpetual inventory system, the required journal entry to record the payment would: debit Accounts Payable $800; credit Merchandise Inventory $16; and credit Cash $784.

This would be the case because accounts payable account would have been credited since the goods were not bought for cash but on account, and the would be $1000 less $200 returns, which is $800.

The discount of 2% x (1000 - 200 returns) would be $16 and posted directly to inventory, since it is a perpetual inventory system.

The actual amount paid is credited to cash, which is $1000 - $200 returns - $16 discount