Question

816A company purchased $1,900 of merchandise on July 5 with terms 2/10, n/30. On July 7, it returned $250 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:000-12540-18810-397100

Answer 1

Answer:

Dr accounts payable   $1,650

Cr merchandise inventory                 $33

Cr cash                                                $1,617

Explanation:

After having returned goods worth $250 , the balance of goods in good condition not returned is $1,650 ($1,900-$250).

Paying the balance due on July 12 implies that payment was made during the discount period, hence payment would be net of discount.

Discount=$1,650*2%=$33.

The entries to record the payment would a debit of $1,650 in accounts payable while cash is credit with  $1,617 while the $33 discount is credited to merchandise inventory