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1 January, 06:37

Goods costing $2,000 are purchased on account on July 15 with credit terms of 2/10, n/30. On July 18, a $200 credit memo is received from the supplier for damaged goods. Give the journal entry on July 24 to record payment of the balance due within the discount period using a perpetual inventory system.

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  1. 1 January, 07:05
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    The journal entry is as follows

    Account payable A/c Dr $1,800

    To Merchandise Inventory A/c $36

    To Cash A/c $1,764

    (Being the amount due is paid)

    The computation is shown below:

    For Account payable

    = $2,000 - $200

    = $1,800

    For Merchandise inventory

    = ($2,000 - $200) * 2%

    = $36

    And, the remaining balance is credited to the cash account
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