Question

An entity purchased US $1 .000 gross amount of inventory on account with terms of 2 f discount if paidwithin 10 days. The seller was responsible for delivery to the shipping point, with freight of US $30 prepaidby the seller. The entity records purchases at the net amount. The journal entry to record payment 8 daysafter the invoice date is ___________.

Answer 1

The answer is given below;

Step-by-step explanation:

on FOB shipping point,the freight is responsibility of the buyer.If it is paid by the seller,the buyer will compensate to the seller.

As the buyer had already recorded purchases on net of discount,therefore the entry will be;

Accounts Payable (1*.98) Dr.$30.98

Cash Cr.$30.98

It is assumed that freight was previously recorded by the buyer as payable to the seller .