Prepare journal entries to record each of the following purchases transactions of a merchandising company. Assume a perpetual inventory system. Nov. 5 Purchased 600 units of product at a cost of $10 per unit. Terms of the sale are 2/10, n/60; the invoice is dated November 5. Nov. 7 Returned 25 defective units from the November 5 purchase and received full credit. Nov. 15 Paid the amount due from the November 5 purchase, less the return on November 7.

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Question:

Prepare journal entries to record each of the following purchases transactions of a merchandising company. Assume a perpetual inventory system.
Nov. 5
Purchased 600 units of product at a cost of $10 per unit. Terms of the sale are 2/10, n/60; the invoice is dated November 5.
Nov. 7 Returned 25 defective units from the November 5 purchase and received full credit.
Nov. 15 Paid the amount due from the November 5 purchase, less the return on November 7.

Answers

Answer:Inventory  6000 debit Accounts Payable  6000 credit--to record purchase--   Accounts Payable  250 debit Inventory         250 credit--to record returned goods--   Accounts Payable  5750 debit Inventory            115 credit Cash                5635 credit--to record payment within discount--   Explanation:We debit the inventory purchases and credit the debt we takewe purchase 600 at $10  each thus, 600 x 10 = $6,000 total purchasedThen, we return 25 untis Hence 25 x $10 = $250 credit receivedLast, we detemrinate the net amount due considering we pay within discount date:6000 - 250 = 5750 account payable balance5750 x 2% = 115 discount received5750 - 115 = 5635 cash outlay

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