Question

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 student's question concerns journalizing inventory transactions which include a purchase, a credit memo, and a payment under a perpetual inventory system. The journal entries are provided for each transaction, reflecting the initial purchase, the allowance via credit memo, and the payment with a discount.

Step-by-step explanation:

The student's question involves journaling transactions in a perpetual inventory system. Specifically, the transactions include a purchase, a credit memo, and a payment with an allowance.

Journal Entries:

1. Aug 2: Merchandise Inventory 14,000
   Accounts Payable 14,000
   (To record the purchase of inventory on credit with terms 1/5, n/15)
2. Aug 4: Accounts Payable 1,500
   Merchandise Inventory 1,500
   (To record the credit memo for the allowance on purchase)
3. Aug 17: Accounts Payable 12,500
   Cash 12,375
   Merchandise Inventory 125
   (To record the payment for inventory purchase less the allowance, and to record the discount taken)

Note that the discount is computed on the net amount after allowance (14,000 - 1,500) * 1% = 125.