Question

Santa Fe Retailing purchased merchandise "as is" (with no returns) from Mesa Wholesalers with credit terms of 2/10, 1/60 and an invoice price of $22,500. The merchandise had cost Mesa $15,345. 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 i 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 $22,500. Note: Enter debits before credits. Prey 2 of 3 ! Next >

Answer 1

Journal entries : Buyer

No	General journal	Debit	Credit
a	Inventory	22500
	Account payable		22500
	(To record purchase)
b	Account payable	22500
	Cash (22500*98%)		22050
	Inventory		450
	(To record amount paid)
c	Account payable	22500
	Cash		22500
	(To record amount paid)

Journal entries : Seller

No	account and explanation	Debit	Credit
a	Account receivable	22500
	Sales revenue		22500
	(To record sales)
b	Cost of goods sold	15345
	Inventory		15345
	(to record cost of goods sold)
c	Cash (22500*98%)	22050
	Sales discount	450
	Account receivable		22500
	(To record collection)
d	Cash	22500
	Account receivable		22500
	(To record collection)