Question

Ivanhoe Industries purchased $14,000 of merchandise on February 1, 2017, subject to a trade discount of 10% and with credit terms of 3/15, n/60. It returned $2,900 (gross price before trade or cash discount) on February 4. The invoice was paid on February 13. Assuming that Ivanhoe uses the perpetual method for recording merchandise transactions, record the purchase, return, and payment using the gross method. (If no entry is required, select "No entry" for the account titles and enter O for the amounts. Round answers to 0 decimal places, e.q. 6,578. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Credit Account Titles and Explanation Debit Date dio mothod for rocording.merchandise transactions, record the purchase, return,

Answer 1

Credit Perpetual inventory system: Date Accounts Title and Explanation 01-02-2017 Inventory (14,000*(100%-10%)] Accounts Payable (To record the purchases) Debit $ 12,600 $ 12,600 04-02-2017 Accounts Payable ($2,900*(100%-10%)]$ 2,610 Inventory (To record the purchase returns) $ 2,610 $ 9,990 13-02-2017 Accounts Payable (12,600-2,610) Cash Inventory (9,990*3%) (To record the payment) $ 9,690 $ 300

Credit Periodic inventory system: Date Accounts Title and Explanation 01-02-2017 Purchases (14,000*(100%-10%)] Accounts Payable (To record the purchases) Debit $ 12,600 $ 12,600 04-02-2017 Accounts Payable ($2,900*(100%-10%)] | $ 2,610 Purchase Returns and Allowances (To record the purchase returns) $ 2,610 $ 9,990 13-02-2017 Accounts Payable (12,600-2,610) Cash ($9,990,-300) Purchase Discount (9,990*3%) (To record the payment) $ 9,690 $ 300 Purchase on February 1 would be recorded if the net method were used at: Cost of purcahses $ 14,000 Less: Trade discount ($14,000*10%) S -1,400 Purchases after trade discount $ 12,600 Less: Cash discount ($12,600*3%) $ -378 Net price $ 12,222