Question

A buyer uses a perpetual inventory system, and on December 7, it contacts its supplier to report that some of the merchandise purchased on December 5 was defective. The seller offered to reduce the merchandise price by $400. The buyer agreed to keep the defective merchandise under those terms. Complete the buyer's necessary journal entry by selecting the account names from the drop-down menus and entering the dollar amounts in the debit or credit columns.

Answer 1

Answer:

Journal

Account Title

Accounts Payable                            $400  (Debit)

Purchase return and allowances    $400 (Credit)

Account Payable

Dec 7   Cash               $400 (Debit)

Purchase Returned

Dec 7   Cash               $400 (Credit)