andise with a list price of 7500 is purchased on account ter

andise with a list price of $7,500 is purchased on account, terms FOB shipping point, 1/10, n/30. The seller prepaid transportation costs of $300. Prior to payment, $2,000 of the correct amount is paid within the discount period. merchandise is returned. The Record the foregoing transactions of the buyer in the sequence indicated below. (a) (b) (c) Purchased the merchandise. Recorded receipt of the credit memorandum for merchandise returned. Paid the amount owed. Date Description Post Ref Debit Credit

Solution

Date Desctiption debit credit 1) Merchandise inventory 7500 To accounts payable 7500 (to record the purchase on inventory) 2) Merchandise Invetory 300 To accounts payable 300 (to record the fright cost) 3) Accounts payable 2000 To Merchandise inventory 2000 (to record the good return) 4) Accounts payable 5500 Merchandise Inventory(5500*1%) 55 To cash 5445 (to record the payment and discounts on payments)