Question

A company purchased $3,200 of merchandise on July 5 with terms 2/10, n/30. On July 7, it returned $900 worth of merchandise. On July 12, it paid the full amount due. Assuming the company uses a perpetual inventory system, and records purchases using the gross method, the correct journal entry to record the payment on July 12 is:

Answer 1

Explanation:

The correct journal entry is as follows

Accounts payable A/c Dr $2,300      

     To Cash A/c   $2,254            

     To Merchandise Inventory A/c $46

(Being due amount is paid and the remaining balance is credited to the cash account)

It is computed below:

For account payable

= $3,200 - $900

= $2,300

For Merchandise inventory

=  ($3,200 - $900) × 2%  

= $46