Question
In: Accounting
Santa Fe Retailing purchased merchandise “as is” (with no returns) from Mesa Wholesalers with credit terms...
Santa Fe Retailing purchased merchandise “as is” (with no
returns) from Mesa Wholesalers with credit terms of 3/10, n/60 and
an invoice price of $17,500. The merchandise had cost Mesa $11,935.
Assume that both buyer and seller use a perpetual inventory system
and the gross method.
1. Prepare entries that the buyer records
for the (a) purchase, (b) cash payment within the discount
period, and (c) cash payment after the discount
period.
2. Prepare entries that the seller
records for the (a) sale, (b) cash collection within the
discount period, and (c) cash collection after the
discount period.
Solutions
Expert Solution
| 1 | ||||
| a | Merchandise Inventory | 17500 | ||
| Accounts Payable | 17500 | |||
| b | Accounts Payable | 17500 | ||
| Merchandise Inventory | 525 | =17500*3% | ||
| Cash | 16975 | |||
| c | Accounts Payable | 17500 | ||
| Cash | 17500 | |||
| 2 | ||||
| a1 | Accounts receivable | 17500 | ||
| Sales | 17500 | |||
| a2 | Cost of goods sold | 11935 | ||
| Merchandise inventory | 11935 | |||
| b | Cash | 16975 | ||
| Sales discounts | 525 | =17500*3% | ||
| Accounts receivable | 17500 | |||
| c | Cash | 17500 | ||
| Accounts receivable | 17500 |
ekkarill92 answered 2 years agoRelated Solutions
Santa Fe Retailing purchased merchandise “as is” (with no returns) from Mesa Wholesalers with credit terms...
Santa Fe Retailing purchased merchandise “as is” (with no
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record for (a) the purchase, (b) cash payment within the discount
period, and (c) cash payment after the discount period. 2. Prepare
entries that the seller should...
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