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Tools Help https://ne connect.mheducation.com connect.html?returnUrl:https%3A%2F% o 2 Saved ecord the following transactions of Allen Inc: (Round your answers to 2 decimal places TRANSACTIONS DATE 2019 March 8 Purchased merchandise on credit from Alenikov Designs, Invoice 1091, 1ist price 3,900, trade discounts or 20 and 10: cems 2/10, n/30. 17 Paid the amount oved on the purchase or March from Alenikov Designa, lss the 2 percent discount, Check 185. View transaction list Journal entry worksheet 2 Purchased merchandise on credit from Alenikov Designs, Invoice 1091, list price $3,900, trade discounts of 20% and 10%; terms 2/10,n/30. Note: Enter debits before credits Date General Journal DebitCredit March 08, 2019 c Prey 3 of a li Next ch

Solution

This is a series of trade discount – 20% and 10%.

Amount owed after 20% discount = List price × (1 – 0.20)

                                                         = 3,900 × 0.80

                                                         = $3,120

Amount owed after 10% discount = 3,120 × (1 – 0.10)

                                                         = 3,120 × 0.90

                                                         = $2,808

Journal

Date

General journal

P.ref

Debit

Credit

08/03/19

Merchandise inventory

$2,808

Accounts payable

$2,808

To record credit purchase, vide invoice number 1091, after 20% and 10% trade discounts.

Payment was made within 10 days; therefore, the cash discount 2% could be availed. Such discount amount is ($2,808 × 2% =) $56.16. Cash amount is ($2,808 – 56.16 =) $2,751.84.

Journal

Date

General journal

P.ref

Debit

Credit

17/03/19

Accounts payable

$2,808

Discount received

$56.16

Cash

$2,751.84

To record payment vide check no 185.

Note: Trade discounts should not be reflected in journal but cash discount should be.

Date	General journal	P.ref	Debit	Credit
08/03/19	Merchandise inventory		$2,808
	Accounts payable			$2,808
	To record credit purchase, vide invoice number 1091, after 20% and 10% trade discounts.