Question

Prepare journal entries to record each of the following transactions. The company records purchases using the gross method and a perpetual inventory system.

Sept. 15 Purchased merchandise with an invoice price of $77,500 and credit terms of 3/5, n/15.
Sept. 29 Paid supplier the amount owed on the September 15 purchase.

Answer 1

Answer and Explanation:

The journal entries are shown below;

On Sept 15

Merchandise inventory $77,500

           To Accounts payable $77,500

(Being purchase of inventory is recorded)  

On Sep 29

Accounts payable $77,500

            To Cash $75,175

            To Merchandise inventory (3% of $77,500 ) $2,325

(Being payment to suppliers after discount is recorded)