Question

Santa Fe Retailing purchased merchandise “as is” (with no returns) from Mesa Wholesalers with credit terms of 3/10, n/60 and an invoice price of $24,000. The merchandise had cost Mesa $16,000. Assume that both buyer and seller use a periodic inventory system and the gross method. 1. Prepare entries that the buyer records for (a) the purchase, (b) cash payment within the discount period, and (c) cash payment after the discount period. 2. Prepare entries that the seller records for (a) the 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.

Answer 1

De $24.000 $24.000 Buyer I Purchase Merchandise Inventory Accounts Payable 2. Payment within discount Period Accounts Payalee ($24000 x 36) Purchase discount (Bf) ($24000 x 97 %) Cash co cel $24000 $ 720 $23,280 3. Payment after discount Period Accounts Payable ( Casu De coi $ 2U god $24000 Seller t Sale ③ Accounts Receivable Sales leevenue $ 24ooo $20 000 coi Dr $ 16000 co 516000 O Cost of Goods sold Merchandise Inventory 2. Collection within discount period Cash Sales discocut Accounts receivabe $23,280 (720 20000 co NW Collection after discount Peliod Cash Accounts Receivabe De $24000 С cei $ 204000