Wizard Industries purchased $13,700 of merchandise on February 1, 2012, subject

Question

Wizard Industries purchased $13,700 of merchandise on February 1, 2012, subject to a trade discount of 9% and with credit terms of 3/15, n/60. It returned $3,300 (gross price before trade or cash discount) on February 4. The invoice was paid on February 13. (a) Assuming that Wizard uses the perpetual method for recording merchandise transactions, record the purchase, return, and payment using the gross method Wizard Industries purchased $13,700 of merchandise on February 1, 2012, subject to a trade discount of 9% and with credit terms of 3/15, n/60. It returned $3,300 (gross price before trade or cash discount) on February 4. The invoice was paid on February 13. Date Account Titles and Explanation Debit Credit Feb. 1 Feb. 4 Feb. 13 (b) Assuming that Wizard uses the periodic method for recording merchandise transactions, record the purchase, return, and payment using the gross method. (Round answers to 0 decimal places, e.g. $6,578. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Feb. 1 Feb. 4 Feb. 13 (c) At what amount would the purchase on February 1 be recorded if the net method were used? (Round answers to 0 decimal places, e.g. $6,578.) Net price $

Explanation / Answer

(a) Feb 1 Merchandise Inventory 12467 Accounts Payable 12467 Purchased 13700 worth of merchandise with 9% trade discount. The 9% trade discounted is not recorded in the books. Feb 4 Accounts Payable 2970 Purchase returns and allowances 2970 Purchase return. Since a 9% trade discount was applied to the merchandise, it should also be applied to the purchase return. 2970 = 3300 (0.91) Feb 13 Accounts payable 9497 Cash 9212 Purchase discount 285 Paid the remaining payable within 15 days from day of purchase. Payment is subject to a 3% cash discount.

Related Questions

Navigate

• Browse (All)
• Browse W
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.