Question

4 Exercise 4-6 Recording sales, purchases, and cash discounts-buyer and seller LO P1, P2 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 $24,300. The merchandise had cost Mesa $16,573. Assume that both buyer and seller use a perpetual inventory system and the gross method. ints 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. eBook Complete this question by entering your answers in the tabs below. Hint Required 1 Required 2 Ask 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. Eeferences View transaction list Journal entry worksheet < 1 2 3 > Record 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 $24,300. Note: Enter debits before credits. Transaction General Journal Debit Credit a Record entry Clear entry View general journal

Answer 1

In The Books of Santa Fe Retailing
Entry	Journal Entries	Debit ($)	Credit ($)
1	Inventory	24,300.00
	Accounts Payable		24,300.00
	(Being purchases made for $24300)
2	Accounts Payable	24,300.00
	Cash		23,571.00
	Inventory		729.00
	(being cash payed for the purchases net of discounts)		-
3	Accounts payable	24,300.00
	Cash		24,300.00
	(being cash payed for purchases made)
In The Books of Mesa Wholesalers
1	Accounts Receivable	24,300.00
	Sales		24,300.00
	Cost of Goods Sold	16,573.00
	Inventory		16,573.00
	(Being credit sale made)
2	Cash	23,571.00
	Inventory	729.00
	Accounts Receivable		24,300.00
	(Being cash received from customer net of discounts)
3	Cash	24,300.00
	Accounts Receivable		24,300.00
	(Being Cash received form customer)
	Workings Credit Term 3/10,n/60 Means that if the bill is paid within 10 days, there is a 3% discount.Otherwise the total amount is due within 60 days discount 729 (24300*3%)