Question

Purchased 1400 units of product at a cost of $40 per unit. Terms of the sale are 5/10, n/60; the invoice is dated November 5

Answer 1

November 5 - Purchase = 1100Unit cost = $40Payable = (1,100*40) 44000 November 7Returns - 25 defective units = 25*40 =1000Terms of sale = 5/10 , n/60If invoices are paid within 10 days , a discount of 5% is given.Therefore payment on November 15 attracts a discount of 5% of the net purchase Journal entries

Explanation: