4) Farthington Soccer Supplies purchases merchandise from a supplier on credit,

Question

4) Farthington Soccer Supplies purchases merchandise from a supplier on credit, terms 2/10, n/30 for $15,300. Assume the company uses a perpetual inventory system, and records purchases using the gross method. When recording the purchase transaction in its purchases journal, Farthington would enter: 4) A) s15,300 in the Inventory Dr. column, $14,994 in the Accounts Payable Cr.column, and $306 in the Purchase Discount Cr. columm B) S15,300 in the Accounts Payable Cr. column and $15,300 in the Inventory Dr. column. C) S15,300 in the Accounts Payable Cr. column and S15,300 in the Supplies Dr. column. D) S15,300 in the Other Accounts Dr. column and $15,000 in the Inventory Cr. column. E) $14,994 in the Inventory Dr. column and $14,994 in the Accounts Payable Cr. column. 5) Maxie's Game World sold games to a customer on credit for $2,600, terms 1/10, n/30 and the cost of the games was $1,700. When recording the collection from the customer made within the discount period, in its cash receipts journal, Maxie's would enter: 5) A) $2,574 in the Cash Dr. column, $26 in the Sales Discount Dr. column and $2,600 in the Accounts Receivable Cr.column. C) S2,600 in the Cash Dr. column and $2,600 in the Accounts Receivable Cr. column. $2,600 in the Cash Dr. column. $2,600 in the Sales Cr. column, and S1,700 in the Cost of Goods Sold Dr./Inventory Cr.column. $2,600 in the Accounts Receivable Dr./Sales C S2,574 in the Cash Dr. column and $2,574 in the Accounts Receivable Cr.column. r. column and $2,600 in the Cash Cr. column. D) E)

Explanation / Answer

The correct answer to record the purchase transaction in Farthington Soccer Supplies purchase journal is:

$15300 in the Inventory Dr. column, $14494 in the Accounts payable Cr. Column and $306 in the purchase discount Cr. Column.

Explanation:

The terms of credit sale simply state, terms 2/10,n/30 for $15300,which means if the payment is made within 10 days there will be a 2% discount (2% of $15300 is $306),otherwise the total amount is due within 30 days.

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