Question

Purchas e d transactions 's Warwick's cow the discount period thing store purchased $25,000 of merchandietrow e , arms FOB destination, 1/10, war m ed the merchandis i ng the paid the amount a. Journalie Warwick Castry to record the purchase Accounts Payable b. Journalire Warwick's Co.'s entry to record the merchandise return Aceste Herlandse wetery J e www. astry to recordem

Answer 1

Ans. 1
	No.	Account Title and Explanations	Debit	Credit
	a	Merchandise inventory	$25,740
		Accounts payable		$25,740
		(Merchandise purchased on account)
	b	Accounts payable	$4,158
		Merchandise inventory		$4,158
		(Merchandise returned)
	c	Accounts payable	$21,582
		Cash		$21,582
		(Final payment made)
	*Calculations:
	*Discount = $26,000 * 1%
	$260
	*Accounts payable = $26,000 - $2,60    =   $25,740
	*Merchandise return = Returned amount - (Returned amount * Discount rate)
		$4,200 - ($4,200 * 1%)
		$4,200 - $42    = $4,158
	*Cash paid = Accounts payable - Merchandise return
	$25,740 - $4,158
	$21,582
	*The payment is made during the discount period of 10 days so the 1% discount rate would be applicable.