Question

On June 5, Staley Electronics purchases 120 units of inventory on account for $15 each, with terms 1/10, n/30. Staley pays for the inventory on June 12. 2. Assume payment is made on June 22. Record the payment on account assuming the company uses a perpetual inventory system.

Answer 1

Answer:

Staley Electronics

Journal Entries:

June 12:

Debit Accounts Payable $1,800

Credit Cash Account $1,782

Credit Cash Discount $18

To record the payment on account.

June 22:

Debit Accounts Payable $1,800

Credit Cash Account $1,800

To record the payment on account.

Explanation:

a) Data and Calculations:

June 5 Inventory purchase of 120 units at $15 each = $1,800

Trade terms = 1/10, n/30

The trade terms imply that Staley receives 1% cash discount if it pays for the inventory before 10 days, but can enjoy a credit period of 30 in total.