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24 August, 06:13

Journalize the following inventory merchandise transactions, assuming that the company uses the perpetual inventory system. Refer to the Chart of Accounts for exact wording of account titles.

Dec. 1 Travis Company purchased merchandise on account from a supplier for $5,700, terms 2/10, net 30.

Dec. 6 Travis Company paid for the merchandise within the discount period.

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  1. 24 August, 09:38
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    The journal entries are as follows:

    (i) On December 1,

    Merchandise inventory A/c Dr. $5,700

    To Account payable $5,700

    (To record the merchandise purchase on account)

    (ii) On December 6,

    Account payable A/c Dr. $5,700

    To cash $5,586

    To Merchandise inventory $114

    (To record the payment of merchandise within the discount period)

    Workings:

    Cash = 98% * $5,700

    = $5,586
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