Question

Santa Fe Retailing purchased merchandise “as is” (with no returns) from Mesa Wholesalers with credit terms of 2/10, n/60 and an invoice price of $19,400. The merchandise had cost Mesa $13,231. Assume that both buyer and seller use a perpetual inventory system and the gross method.

1. Prepare entries that the buyer records for the (a) purchase, (b) cash payment within the discount period, and (c) cash payment after the discount period.
2. Prepare entries that the seller records for the (a) sale, (b) cash collection within the discount period, and (c) cash collection after the discount period.

Complete this question by entering your answers in the tabs below.

• Required 1
• Required 2

Prepare entries that the buyer records for the (a) purchase, (b) cash payment within the discount period, and (c) cash payment after the discount period.

Journal entry worksheet

• Record Santa Fe Retailing purchased merchandise “as is” (with no returns) from Mesa Wholesalers with credit terms of 2/10, n/60 and an invoice price of $19,400.
• Record Santa Fe paid within the discount period.
• Record Santa Fe paid after the discount period.

Note: Enter debits before credits.

Transaction	General Journal	Debit	Credit
a

Prepare entries that the seller records for the (a) sale, (b) cash collection within the discount period, and (c) cash collection after the discount period.

Journal entry worksheet

• Record Santa Fe Retailing purchased merchandise “as is” (with no returns) from Mesa Wholesalers with credit terms of 2/10, n/60 and an invoice price of $19,400.
• Record the merchandise had cost Mesa $13,231.
• Record cash received within discount period.
• Record cash received after discount period.

Note: Enter debits before credits.

Transaction	General Journal	Debit	Credit
a-1

Answer 1

1) Journal entries : Buyer

No	General Journal	Debit	Credit
a	Merchandise inventory	19400
	Account payable		19400
b	Account payable	19400
	Cash (19400*98%)		19012
	Merchandise inventory		388
c	Account payable	19400
	Cash		19400

2) Journal entries : Seller

No	General Journal	Debit	Credit
a	Account receivable	19400
	Sales revenue		19400
b	Cash	19012
	Sales discount	388
	Account receivable		19400
c	Cash	19400
	Account receivable		19400