Question

On December 22, Travis Company purchased merchandise on account from a supplier for $11,100, terms 2/10, net 30. Travis Company paid for the merchandise within the discount period on December 31.

Required:

Under a perpetual inventory system, record the journal entries required for the above transactions. Refer to the Chart of Accounts for exact wording of account titles

CHART OF ACCOUNTS

Travis Company

General Ledger

	ASSETS
110	Cash
120	Accounts Receivable
125	Notes Receivable
130	Merchandise Inventory
131	Estimated Returns Inventory
140	Supplies
142	Prepaid Insurance
180	Land
190	Equipment
191	Accumulated Depreciation

	LIABILITIES
210	Accounts Payable
216	Salaries Payable
221	Sales Tax Payable
222	Customers Refunds Payable
231	Unearned Rent
241	Notes Payable

	EQUITY
310	Common Stock
311	Retained Earnings
312	Dividends
313	Income Summary

	REVENUE
410	Sales

	EXPENSES
510	Cost of Merchandise Sold
521	Delivery Expense
522	Advertising Expense
523	Depreciation Expense
526	Salaries Expense
531	Rent Expense
533	Insurance Expense
534	Supplies Expense
536	Credit Card Expense
560	Miscellaneous Expense
710	Interest Expense

Answer 1

In Perpetual Inventory System , any discount received related to purchase of inventory credited to merchandise inventory account , to record true value of inventory . In given Question 2/10 net 30 means 2% discount received if paid within 10 days otherwise amount is due in full within 30 days .