Question

Swifty Industries purchased $10,100 of merchandise on February 1, 2020, subject to a trade discount of 10% and with credit terms of 3/15, n/60. It returned $2,600 (gross price before trade or cash discount) on February 4. The invoice was paid on February 13.

Assuming that Swifty uses the periodic method for recording merchandise transactions, record the purchase, return, and payment using the gross method. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 6,578. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Answer 1

Solution:

Journal entry using the periodic method:-

Date	Particular	Debit($)	Credit($)
2020 February,1	Purchase account Account payable (being merchandise purchase)	9090 (10,100*90%)	9090 (10,100*90%)
February, 4	Account payable Purchase return (being merchandise return)	2340 (2600*90%)	2340 (2600*90%)
February, 13	Account payable Purchase discount Cash account (being cash paid to merchandise) (WN-1)	6750	202 6548

Working Note (WN) -1

Calculation of account payable:  $(9090-2340) = $6750

Calculation of purchase discount: $6750*3% = $202.5 i.e. 202

calculation of cash payament: $(6750-202) = $6548