Question

Santa Fe Retailing purchased merchandise "as is" (with no returns) from Mesa Wholesalers with credit terms of 2/10, n/60 and an invoice price of $23,300. The merchandise had cost Mesa $15,891. Assume that both buyer and seller use a perpetual inventory system and the gross method. 1. Prepare entries that the buyer records for the (a) purchase, (b) cash payment within the discount period, and (c) cash payment after the discount period. 2. Prepare entries that the seller records for the (a) sale, (b) cash collection within the discount period, and (c) cash collection after the discount period. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare entries that the buyer records for the (a) purchase, (b) cash payment within the discount period, and (c) cash payment after the discount period. View transaction list Journal entry worksheet 2 3 Record Santa Fe Retailing purchased merchandise "as is" (with no returns) from Mesa Wholesalers with credit terms of 2/10, n/60 and an invoice price of $23,300. Note: Enter debits before credits. Transaction General Journal Debit Credit

Answer 1

Journal entry

In the books of Buyer

Transaction	General journal	Debit	Credit
a	Merchandise inventory	23300
	Account payable		23300
	(To record purchase)
b	Account payable	23300
	Cash (23300*98%)		22834
	Merchandise inventory		466
	(To record payment)
c	Account payable	23300
	Cash		23300
	(To record payment)

2) Journal entries

In the books of Seller

No	General Journal	Debit	Credit
a	Account receivable	23300
	Sales revenue		23300
b	Cost of goods sold	15891
	Merchandise inventory		15891
c	Cash (23300*98%)	22834
	Sales discount	466
	Account receivable		23300
d	Cash	23300
	Account receivable		23300