Question

Santa Fe Retailing purchased merchandise "as is" (with no returns) from Mesa Wholesalers with credit terms of 2/10, n/60 and an invoice price of $16,500. The merchandise had cost Mesa $11,253. Assume that both buyer and seller use a perpetual inventory system and the gross method. 1. Prepare entries that the buyer records for the (a) purchase, (b) cash payment within the discount period, and (c) cash payment after the discount period. 2. Prepare entries that the seller records for the (a) sale, (b) cash collection within the discount period, and (c) cash collection after the discount period. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare entries that the buyer records for the (a) purchase, (b) cash payment within the discount period, and (c) cash payment after the discount period.

Answer 1

1) Journal entry (buyer)

No	General Journal	Debit	Credit
1	Merchandise inventory	16500
	Account payable		16500
2	Account payable	16500
	Cash (16500*98%)		16170
	Merchandise inventory		330
3	Account payable	16500
	cash		16500

b) Journal entry

No	General Journal	Debit	Credit
1	Account receivable	16500
	Sales revenue		16500
	Cost of goods sold	11253
	Merchandise inventory		11253
2	Cash (16500*98%)	16170
	Sales discount	330
	Account receivable		16500
3	Cash	16500
	Account receivable		16500