Question

Juniper Company uses a perpetual inventory system and the gross method of accounting for purchases. The company purchases $9,750 of merchandise on August 7 with terms 1/10, n/30. On August 11, it returned $1,500 worth of merchandise. On August 16, it paid the full amount due. The correct journal entry to record the payment on August 16 is:

Answer 1

The journal entries for the whole transaction are:

August 7, 202x, merchandise purchased on account, terms 1/10, n/30

Dr Merchandise inventory 9,750

Cr Accounts payable 9,750

August 11, 202x, partial return of purchased merchandise

Dr Accounts payable 1,500

Cr Merchandise inventory 1,500

August 16, 202x, invoice is paid within discount period

Dr Accounts payable 8,250

Cr Cash 8,167.50

Cr Purchase discounts 82.50