Keneco Company, a merchandising firm, experienced the following expenditure proc

Question

Keneco Company, a merchandising firm, experienced the following expenditure process events during a month. This company uses the perpetual inventory system and the gross price method to record inventory purchases. Prepare journal entries in good form to record following events 1. Purchased $30,000 of inventory on account, terms 2/10, net 30. 2. Purchased $10,000 of inventory on account, terms 1/10, net/30. Paid for the inventory purchased in #1 above within the discount period. 4. Paid for the inventory purchased in #2 above after the discount period.

Explanation / Answer

Journal entry :

No Account & explanation debit credit 1 Inventory 30000 Account payable 30000 (To record purchase inventory) 2 Inventory 10000 Account payable 10000 (To record purchase inventory) 3 Account payable 30000 Cash 30000*98% 29400 Inventory 600 (To record amout paid) 4 Account payable 10000 Cash 10000 (To record amount paid)

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