Question

required 1: prepare entries that the buyer records for the (a) purchase, (b) cash payment within discount period, and (c) cash payment after discount period.

Required 2: prepare entries the seller records for the (a) sale, (b) cash collection within discount period, and (c) cash collection after the discount period

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 $20,400. The merchandise had cost Mesa $13,913. 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 1 Record 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 $20,400. Note: Fnter Habits hofre credite < Prev 2 of 6 !!! Next >

Answer 1

	In the Books of Santa Fe
Transaction	Account titles and explanation		Debit	Credit
a	Purhcase		$             20,400
	Accounts Payable			$         20,400
	(to inventory purchased on account)
b	Accounts Payable		$             20,400
	Cash[$20,400-($20,400*2%)]			$         19,992
	Purchase Discounts($20,400*2%)			$              408
	(to amount due paid to Mesa after adjusting discount)
c	Accounts Payable		$             20,400
	Cash			$         20,400
	(to amount due paid to mesa)
	In the Books of Mesa Wholesale
Transaction	Account titles and explanation		Debit	Credit
a.1	Accounts Receivable		$             20,400
	Sales			$         20,400
	(to sales made on account)
a.2	Cost of goods sold		$             13,913
	Merchandise Inventory			$         13,913
	(to cost of goods sold recorded at cost)
b	Cash[$20,400-($20,400*2%)]		$             19,992
	Sales Discount($20,400*2%)		$                  408
	Accounts Receivable			$         20,400
	(to amount due received from Santa Fe after adjusting discount)
c	Cash		$             20,400
	Accounts Receivable			$         20,400
	(to amount due paid to Santa Fe)