Question

Purchase-Related Transactions

The Wheatland Company purchased merchandise on account from a supplier for $30,000, terms 1/10, n/30. The Wheatland Company returned $8,000 of the merchandise and received full credit.

a. What is the amount of cash required for the payment within the discount period?

Purchase-Related Transactions The Wheatland Company purchased merchandise on account from a supplier for $30,000, terms 1/10, n/30. The wheatland Company returned $8,000 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 The Wheatland Company to record the return? Merchandise Inventory Feedback Check My Work a. The return reduces the amount owed. The discount is taken on the outstanding balance after the return is deducted. b. Under a perpetual system for a return, the buyer reduces both Accounts Payable and Merchandise Inventory.

Answer 1

Please find below the answer..

Purchase amount =	30000
Less : Purchases return=	-8000
Net purchases	22000
Discount applied =1% of 22000	220
Net amount paid = 22000-220	21780
Therefore cash required =	21780