Question

X-Mart uses the perpetual inventory system to account for its merchandise. On May 1, it purchased $400 of merchandise on account with terms of 2/15, n/40. On May 3, X-Mart returned $50 of merchandise due to defect. Assuming that the purchase was paid for within the discount period, demonstrate the required journal entry for X-Mart to record the payment

Answer 1

Answer:

Explanation:

The journal entry is shown below:

Account payable A/c Dr $350

       To Cash A/c Dr                       $343

        To Merchandise inventory A/c $7

(Being the amount is paid)

The computation is shown below:

Account payable = Purchase of inventory amount - returned goods

                            = $400 - $50

                            = $350

Cash Account = Account payable × discount rate

                        = $350 × 2%

                        = $7

And, the remaining amount will be credited to the cash account