Question

4. On February 5^th, Elsinore purchased $4,000 worth of inventory on account on terms of 1/10, n/30 from the Grimace Company Account

5. on February 8^th. Elsinore returned $300 worth of inventory to Grimace in exchange for a reduction in the amount that it owes 

6. On February 14th, Elsinore paid Grimace the amount it owed and took advantage of the purchase discount. 

Answer 1

Journal Entries:

	Date	Account	Debit	Credit
4)	Feb. 5th	Merchandise Inventory	$4,000
		Accounts Payable - Grimace Company		$4,000
		(To record purchase of merchandise inventory on account)
5)	Feb. 8th	Accounts Payable - Grimace Company	$300
		Merchandise Inventory		$300
		(To record the return of merchandise inventory purchased on account)
6)	Feb. 14th	Accounts Payable - Grimace Company ($4,000 - $300)	$3,700
		Discount Received ($3,700*1/100)		$37
		Cash ($3,700 - $37)		$3,663
		(To record the payment for the amount owed after discount)