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.

Answer 1

Answer:

Purchases' journal entries:

Dr Inventory    $1500

Cr Accounts payable  $1500

Being purchase of inventory on account

Payment's journal entries

Dr Accounts payable $1500

Cr Cash                                  $1470

Cr Discount received               $30

Being payment made to accounts payable

Explanation:

The journal entries required for the purchase are as follows:

Dr Inventory  $1500

Cr Accounts payable                  $1500

Being purchase of inventory on account

Since an obligation to pay $1500 is owed to the supplier, accounts payable is credited as an increase in liability and a corresponding debit in inventory account.

Since payment was made within discount period,Conquest company would paid the amount owed less 2% discount;

Amount paid is $1500*98%=$1470