Question

Journalize the following inventory merchandise transactions for both Sampson and Batson, assuming that the both Sampson and Batson uses the perpetual inventory system.
Dec. 1 Sampson Co. sold merchandise to Batson Co. on account, $22,700, terms 2/15, net 45. The cost of the merchandise sold is $17,025. 6 Batson Co. paid the invoice within the discount period.

Answer 1

Answer:

Sampson Records

Account Receivables 22,246 debit

      Sales Revenues        22,246 credit

--to record sale--

Cash                           22,246 debit

      Account Receivables 22,246 credit

--to record receipts--

Batson Records:

Inventory    22,700 debit

   Accounts Payable   22,700 credit

--to record purchase--

Account Payable  22,700 debit

        Inventory                  454 credit

       Cash                     22,246 credit

--to record payment--

Explanation:

Calculations:

Invoice: 22,700

discount 2% within the first 15 days

discount amount; 22,700 x 0.02 = 454

invoice net of discount = 22,700 - 454 = 22,246

Sampson record assuming the customer will take the discount.

Batson will record the invoice in full. As that is the value of the goods that day.

Then, it will adjust the inventory when paying within discount period.