Question

On November 15, 2018, Shields Company purchased inventory costing $6,200 on credit. The credit terms were 2/10, n/30. a. Assume that Shields Company paid the invoice on November 23, 2018. Prepare journal entries to record the purchase of this inventory and the cash payment to the supplier using the net-of-discount method.

Answer 1

Answer:

Entries posted

Explanation:

The dicount received will be credited as we paid the supplier earlier of 30 days according to the credit terms

Journal Entry to purchase inventory on November 15, 2018

Dr Inventory                  $6,200

Cr  Accounts payable           $6,200

Journal Entry for payment to supplier on November 23, 2018

Dr Accounts payable    $6,200

Cr Discount received                 $124

Cr  Cash                                       $6076