Merchandise was purchased on account from Grant\'s Distributors on June 12. The

Question

Merchandise was purchased on account from Grant's Distributors on June 12. The purchase price was $5,000, less a 10% trade discount and credit terms of 3/10, n/30.

1. Calculate the net amount to record the invoice, less the 10% trade discount.
2. Calculate the amount to be paid on this invoice within the discount period.
3. Journalize the purchase of the merchandise on June 12 and the payment on June 22 (within the discount period) in a general journal.

If an amount box does not require an entry, leave it blank.

Explanation / Answer

1 Merchandise inventory $5,000 Less:Discount $500 $4,500 2 The invoice price was $4,500 Less Cash Discount $135 ($4500x3/100=$135) Net Amount to be paid $4,365 3 Date Particulars                       Debit ($) Credit ($) 12-Jun Merchadise inventory $4,500 AccountsPayable $4,500 (To reecord credit purchases) 22-Jun AccountsPayable $4,500 Cash $4,365 Received Discount $135 (To record cash payment)

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