Question

Alpha Company used the periodic inventory system for purchase & sales of merchandise. Discount terms for both purchase & sales are, FOB Destination, 2/10, n30 and the gross method is used. > Alpha Company purchased on account $2,700 of merchandise from Bravo Company on May 2, 2016. > Alpha Company returned, to Bravo Company, $200 of this merchandise on May 3, 2016. > Freight charges related to this transaction of $150 were paid by Bravo Company. Use this information to prepare Alpha Company's General Journal entry (without explanation) for the payment for merchandise on May 15. If no entry is required then write "No Entry Require

Answer 1

Answer:

(DR) Accounts Payable $2,500

(CR) Cash $2,500

Explanation:

Since the purchase was made on May 2 and the payment is on May 15 then the discount is not available.

Just focus on the net amount of accounts payable.

Initial Purchase of $2,700 less the return of $200 will give $2,500 net accounts payable.

So, we debit Account Payable and Credit Cash for $2,500 because "payment" means crediting "Cash"