Question

Nieman Company purchased merchandise on account from Springhill Company for $12,400, terms 1/10, n/30. Nieman returned merchandise with an invoice amount of $2,000 and received full credit.

a. If Nieman Company pays the invoice within the discount period, what is the amount of cash required for the payment? If required, round the answer to the nearest dollar.
$

b. What account is debited by Nieman Company to record the return?

Answer 1

Nieman Company purchased merchandise on account from Springhill Company for $12,400, terms 1/10, n/30. Nieman returned merchandise with an invoice amount of $2,000 and received full credit.

a. If Nieman Company pays the invoice within the discount period, what is the amount of cash required for the payment? If required, round the answer to the nearest dollar.
$

b. What account is debited by Nieman Company to record the return?

a. 1/10, n/30 terms means if the amount is paid in 10 days then there will be an extra discount of 1% or else Nieman can pay without any discount within 30 days.

There is a return of $2000
Net purchase = $10,400
Net amount payable = $10,400-1%×($10,400)
= $10,269

Net amount payable= $10,269 (answer)

b.
Journal entry recorded is:
Accounts receivable-Springhill Company A/c 2000
To purchase returns 2000

So the account debited is "Accounts receivable-Springhill Company A/c "