Question

On July​ 1, Corrao Company purchased $ 1 comma 500 of inventory on account with credit terms of 3​/10, net 30. Corrao Company uses the perpetual inventory system. On July​ 5, Corrao Company paid the amount due. What journal entry did they prepare on July​ 5?

Answer 1

Under the terms of 3/10, net 30, C Company will get a discount of $3 if it pays for the inventory purchased within 10 days from the date of purchase.

Therefore, the journal entry is as follows:

Accounts Payable A/c Dr. $1,500

To Inventory $3

To cash $1,497

(To record the payment of due amount)