Question

Purchase-Related Transactions The Stationery Company purchased merchandise on account from a supplier for $8,700, terms 1/10, n/30. The Stationery Company returned merchandise with an invoice amount of $1,100 and received full credit.

(a) If The Stationery Company pays the invoice within the discount period, what is the amount of cash required for the payment?


(b) Under a perpetual inventory system, what account is credited by The Stationery Company to record the return?

Answer 1

a. $7,524

b. Merchandise Inventory A/c

Step-by-step explanation:

a. The computation is shown below:

= Merchandise amount - return and allowances - discount

= $8,700 - $1,100 - $76

= $7,524

The discount = (Merchandise amount - return and allowances) × discount rate

= ($8,700 - $1,100) × 1%

= $76

b. To record the return under the perpetual inventory system, the following entry is passed

Accounts payable / Account receivable A/c Dr

To Merchandise Inventory A/c

(Being return is recorded)

The Merchandise Inventory A/c is credited