Question

Shankar Company uses a perpetual system to record inventory transactions. The company purchases inventory on account on February 2, 2015, for $30,000, with terms 2/10, n/30. On February 10, the company pays on account for the inventory. Record the inventory purchase on February 2 and the payment on February 10. (If no entry is required for a particular transaction/event, select "No journal entry required" in the first account field.)

Answer 1

Answer and Explanation:

1. Merchandise Inventory A/c $30,000

         To Accounts payable A/c $30,000

(Being purchase of merchandise inventory is recorded)

2. Account payable $30,000

          To Merchandise inventory ($30,000 × 2%) $600

          To Cash $29,400

(Being the payment is recorded)

Only these two entries are passed on Feb 2 and Feb 10