Cruise Industries purchased $12,100 of merchandise on February 1, 2014, subject

Question

Cruise Industries purchased $12,100 of merchandise on February 1, 2014, subject to a trade discount of 10% and with credit terms of 3/15, n/60. It returned $2,800 (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

Assuming that Cruise uses the periodic method for recording merchandise transactions, record the purchase, return, and payment using the gross method.

Date

Account Titles and Explanation

Debit

Credit

Feb. 1

Feb. 4

Feb. 13

At what amount would the purchase on February 1 be recorded if the net method were used?

Net price=

Date

Account Titles and Explanation

Debit

Credit

Feb. 1

Feb. 4

Feb. 13

Assuming that Cruise uses the periodic method for recording merchandise transactions, record the purchase, return, and payment using the gross method.

Date

Account Titles and Explanation

Debit

Credit

Feb. 1

Feb. 4

Feb. 13

At what amount would the purchase on February 1 be recorded if the net method were used?

Net price=

Explanation / Answer

Debit Credit Feb 1 Purchase a/c 10800             Account Payable a/c 10800 Feb 4 Account Payable a/c 2520            Purchase return & Allowance 2520 Feb 13 Account Payable a/c 8280            Purchase Discount 256.5           Cash 8023.5 9500 (12000-2500) =(12000-2500) 8550 after trade discount of 10 % =9500*0.90 256.5 cash discount 3% =8550*0.03

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