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Wiseman Company purchased merchandise on account from a supplier for $85,000, terms 1/10, n/30. Wiseman Company...

Wiseman Company purchased merchandise on account from a supplier for $85,000, terms 1/10, n/30. Wiseman Company returned $9,800 of the merchandise and received full credit.

A) If Wiseman Company pays the invoice within the discount period, what is the amount of cash required for the payment?

B) What account is debited by Wiseman Company to record the return?

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Homework Answers

Answer #1

A.

Purchase = $85,000

Purchase returns = $9,800

Discount terms = 1/10, n/30

Final amount due = Purchase- Purchase returns

= 85,000-98,00

= $75,200

Purchase discount = Final amount due x Purchase discount rate

= 75,200 x 1%

= $752

Cash payment = Final amount due- Purchase discount

= 75,200-752

= $74,448

The amount of cash required for the payment $74,448

B.

Wiseman company will debit accounts payable when it return the goods.

Kindly comment if you need further assistance. Thanks

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