Question

Merchandise purchase: allowance-perpetual L03 Journalize each of the following transactions assuming a perpetual inventory system. Aug 2: purchased $14.000 of merchandise inventory: terms 1/5, n/15. 4: Received a credit memo from the supplier confirming a $1.500 allowance regarding the August 2 purchase 17: Paid for the August 2 purchase, less the allowance.

Answer 1

The transactions involve purchasing merchandise, receiving an allowance, and making a payment. Entries are made to Merchandise Inventory and Accounts Payable, and finally, Cash is credited for the payment made.

Step-by-step explanation:

Journalizing Merchandise Transactions in a Perpetual Inventory System

On August 2, the company purchased $14,000 worth of merchandise with payment terms of 1/5, n/15, which means they are entitled to a 1% discount if they pay within 5 days, and the net amount is due within 15 days.

The journal entry on August 2 is

Dr. Merchandise Inventory $14,000

Cr. Accounts Payable $14,000

On August 4, the company received a credit memo for a $1,500 allowance. This allowance is recorded as:

Dr. Accounts Payable $1,500

Cr. Merchandise Inventory $1,500

Finally, on August 17, the company paid for the purchase, less the allowance. They did not take the discount, since more than 5 days had passed. The payment is recorded as:

Dr. Accounts Payable $12,500 (= $14,000 - $1,500)

Cr. Cash $12,500