Question

Conquest Company uses a perpetual inventory system. Conquest purchased $1,500 of merchandise on account and payment was made within the discount period. The credit terms were 2/10, n/30. Journalize Conquest's (a) purchase and (b) payment. If an amount box does not require an entry, leave it blank. (a) (b)

Answer 1

Answer:

(a)

Dr. Inventory               $1,500

Cr. Account Payable  $  1,500

(b)

Dr. Account Payable  $1,500

Cr. Discount Income  $30

Cr. Cash                      $1,470

Explanation:

Credit terms of 2/10, n/30 means there is a discount of 2% is available on payment of due amount within discount period of 10 days after sale with net credit period of 30 days.

Purchase = $1,500

As payment is made withindiscount period, so the discount will be availed.

Discount = $1,500 x 2% = $30

Payment = $1,500 - $30 = $1,470