Question

Purchase-Related Transactions Oppenheimer Company purchased merchandise on account from a supplier for $12,700, terms 2/10, n/30. Oppenheimer Company returned $1,700 of the merchandise and received full credit. a. What is the amount of cash required for the payment within the discount period? b. Under a perpetual inventory system, what account is credited by Oppenheimer Company to record the return? 4 Previous Check My Work 3:17 PM /19/2020 о 3

Answer 1

Answer-

a. 2/10 net 30 means that if the amount due is paid within 10 days, the customer will enjoy a 2% discount. Otherwise, the amount is due in full within 30 days.

In our question inventory amounts $12,700 is bought first and inventory amounts $1700 has been returned.

So total payable is $11,000 only.(12,700-1700)

If it is payed with in 10 days a discount of 2% can be enjoyed.

So, discount available = 11,000*2%

=$220

Cash required for payment within the discount period = Total payable - discount available

=11,000-220

= $10,780

b. Under the perpetual inventory methord, in case of a purchase return to supplier- account payable is debited and Inventory is credited.

Inventory account is credited.