Question

On July 1, Alvarez, Inc. purchased merchandise for $10,800 with terms of 2/10, n/30. On July 5, the firm returned $1,500 of the merchandise to the seller. Payment of the account occurred on July 8. Alvarez uses the perpetual inventory system. Required a. Prepare the journal entries for July 1, July 5, and July 8.

Answer 1

Step-by-step explanation:

The journal entries are shown below:

On July 1

Merchandise Inventory A/c $10,800

To Accounts payable A/c $10,800

(Being goods purchased on credit)

On July 5

Accounts payable A/c Dr $1,500

To Merchandise Inventory A/c $1,500

(Being goods returned)

On July 8

Accounts payable A/c Dr $9,300 ($10,800 - $1,500)

To Cash A/c $9,114

To Merchandise Inventory A/c $186 ($10,800 - $1,500) × 2%

(Being due amount is paid and the remaining balance is credited to the cash account)