3 Taylor Inc uses a perpetual inventory system and purchased

3. Taylor, Inc. uses a perpetual inventory system and purchased $17,800 of merchandise on March 7 with credit terms of 2/10, n/30. Merchandise with a cost of $2,800 was damaged and returned to the seller on March 10. On March 16 the company paid the amount due. Prepare the journal entries to record the transactions on all three dates. (6 points) Date Account Name Debit Credit

Solution

Date Title Debit Credit Mar-07 Merchandise inventory $ 17,800 Accounts payable $ 17,800 (To record purchase of inventory on account) Mar-10 Accounts payable $    2,800 Merchandise inventory $    2,800 (To record return of damaged goods) Mar-16 Accounts payable ($17,800-$2,800) $ 15,000 Merchandise inventory ($15,000*2%) $        300 Cash $ 14,700 (To record payment of cash after discount)