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 $26,900. The merchandise had cost Mesa $18,346. 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 View journal entry worksheet No Transaction General Journal Debit Credit 1 a 26,900 Merchandise inventory Accounts payable 26,900 2 b Accounts payable Merchandise inventory Cash 3 с Accounts payable Cash

Answer 1

Requirement #1)

No	transaction	General journal	debit	credit
1	a	merchandise inventory	26900
		Accounts payable		26900
		(To record purchase of merchandise on credit)
2	b	Accounts payable	26900
		Merchandise inventory		807
		Cash		26,093
		(To record record payment within 3% Discount period, 26900x(100-3)%
3	c	Accounts payable	26900
		Cash		26900
		(To record payment after 3% Discount period)

Requirement #2)

1	a.i	Accounts Receivable	26900
		Sales		26900
		(To record sale of merchandise on account)
	a.ii	Cost of goods sold	18346
		Merchandise inventory		18346
		(To record cost of goods sold)
2	b	Cash	26,093
		Sales Discount	807
		Accounts receivables		26900
		(To record cash received within Discount period)
3	c	cash	26900
		Accounts receivables		26900
		(To record the cash received after discount period)