Question

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 $24,900. The merchandise had cost Mesa $16,982. 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.

Journal entry worksheet

Record 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 $24,900.

Record the merchandise had cost Mesa $16,982.

Record cash received within discount period.

Record cash received after discount period.

Note: Enter debits before credits.

I need the answers.

	Transaction General Journal Debit Credit a-1

Answer 1

Solution 1:

Journal Entries - Santa Fe Retailing
Date	Particulars	Debit	Credit
a	Inventory A/c Dr	$24,900.00
	To Accounts Payable		$24,900.00
	(Being inventory purchased on credit)
b	Accounts Payable Dr	$24,900.00
	To Cash ($24,900*97%)		$24,153.00
	To Purchase Discount ($24,900*3%)		$747.00
	(Being payment made to creditors and discount availed)
c	Accounts Payable Dr	$24,900.00
	To Cash		$24,900.00
	(Being payment made to creditors after discount period

Solution 2:

Journal Entries - Mesa Wholesalers
Date	Particulars	Debit	Credit
a	Accounts Receivables Dr	$24,900.00
	To Sales Revenue		$24,900.00
	(Being inventory sold on credit)
a	Cost of Goods sold Dr	$16,982.00
	To Inventory		$16,982.00
	(Being cost of goods transferred from inventory to COGS)
b	Cash Dr	$24,153.00
	Sales Discount Dr	$747.00
	To Accounts receivables		$24,900.00
	(Being cash received from debtors with in discount period)
c	Cash Dr	$24,900.00
	To Accounts receivables		$24,900.00
	(Being cash received from debtors after discount period)