Question

Exercise 8.5 Recording purchases made with trade discounts. LO 8-1

Record the following transactions of Allen Inc.: (Round your answers to 2 decimal places)

DATE			TRANSACTIONS
2019
March	8		Purchased merchandise on credit from Alenikov Designs, Invoice 1091, list price $3,400, trade discounts of 30% and 20%; terms 3/10, n/30.
	17		Paid the amount owed on the purchase of March 8 from Alenikov Designs, less the 3 percent discount, Check 185.

Answer 1

Date Credit General Journal Merchandise inventory Accounts payable Debit $1,904.00 Mar. 8 $1,904.00 Trade discount =3,400 x 30% =1,020 Additional discount = (3,400-1,020) 20% = 476 Total discount = 1,020 +476 =1,496 Accounts payable = 3,400-1,496 =1,904 Credit Date Mar. 17 Debit $1,904.00 General Journal Accounts payable Discount received (1,904 x3%) Cash $57.12 $1,846.88