Question

Journalize the following inventory merchandise transactions for both Sampson and Batson, assuming that the both Sampson and Batson uses the perpetual inventory system.

Dec. 1 Sampson Co. sold merchandise to Batson Co. on account, $22,700, terms 2/15, net 45. The cost of the merchandise sold is $17,025. 6 Batson Co. paid the invoice within the discount period.

Answer 1

Sampson Records

Account Receivables 22,246 debit

Sales Revenues 22,246 credit

--to record sale--

Cash 22,246 debit

Account Receivables 22,246 credit

--to record receipts--

Batson Records:

Inventory 22,700 debit

Accounts Payable 22,700 credit

--to record purchase--

Account Payable 22,700 debit

Inventory 454 credit

Cash 22,246 credit

--to record payment--

Step-by-step explanation:

Calculations:

Invoice: 22,700

discount 2% within the first 15 days

discount amount; 22,700 x 0.02 = 454

invoice net of discount = 22,700 - 454 = 22,246

Sampson record assuming the customer will take the discount.

Batson will record the invoice in full. As that is the value of the goods that day.

Then, it will adjust the inventory when paying within discount period.