Question

Accountins for Purchases of Merchandise in a Periedie Inventory System Journelipe eech of the foowing trasctions on the books of the Buyer Company Buyer purchases $1,000 of merchandise from the Seler on July 11. The teems of e sale are 2/10, n/30 (Periodic System) he e Date Debit Credi Account Titfes Per Apr et On July 12, the Buyer returns $200 of the merchandise for credit sy is di On July 13, Buyer pays a freight bill of $75. Lash On July 16, the Buver oays the amount owed Seller in full and takes advantage of the available cash discount. ই०० Instead of transaction # 4 above, assume that the Buyer does not pay the bill until July 23, after the discount period has expired.

Answer 1

All the entries 1-4 are correct.

For the 5th entry

As the buyer has not paid the bill till July 23 i.e. the discount period has expired, therefore, he will have to pay the full amount of $800 outstanding to the credit of the seller. Also the credit period states n/30 which means that the credit period is for 30 days. If the buyer pays within 30 days from date of purchase, then he will not have to pay any interest on the balance amount. Then the journal entry in this case would be:

Date	Account Titles	Debit	Credit
7/23	Account payable	$800
	Cash		$800

If the buyer pays $800 beyond 30 days from July,11 then the seller will levy interest on the buyer.