5 Purchased 500 units of product at a cost of $20 per unit. Terms of the sale are 3/10, n/60; the invoice is dated November 5

1.

Compute the amount to be paid for each of the four separate invoices assuming that all invoices are paid within the discount period.

Merchandise (gross) Terms Payment a. $10,000 2/10, n/60 $9,800selected answer correct b. 27,500 1/15, EOM 27,225selected answer correct c. 85,000 1/10, n/30 84,150selected answer correct d. 22,500 3/15, n/45 21,825selected answer correct Explanation Payment Computations a. $ 9,800 $ 10,000 – ($ 10,000 × 2%) = $ 10,000 × 98% b. $ 27,225 $ 27,500 – ($27,500 × 1%) = $ 27,500 × 99% c. $ 84,150 $ 85,000 – ($85,000 × 1%) = $ 85,000 × 99% d. $ 21,825 $ 22,500 – ($22,500 × 3%) = $ 22,500 × 97%

----------------------------------------------------------------------------------- 2. Prepare journal entries to record each of the following transactions of a merchandising company. The company uses a perpetual inventory system and the gross method. Nov. 5 Purchased 500 units of product at a cost of $20 per unit. Terms of the sale are 3/10, n/60; the invoice is dated November 5. Nov. 7 Returned 45 defective units from the November 5 purchase and received full credit. Nov. 15 Paid the amount due from the November 5 purchase, less the return on November 7. No Date General Journal Debit Credit 1 Nov 05 Merchandise inventory 500*20selected answer correct 10,000selected answer correct not attempted Accounts payableselected answer correct not attempted 10,000selected answer correct 2 Nov 07 Accounts payable 45*20selected answer correct 900selected answer correct not attempted Merchandise inventoryselected answer correct not attempted 900selected answer correct 3 Nov 15 Accounts payable 10000-900selected answer correct 9,100selected answer correct not attempted Merchandise inventory 3% of 9100selected answer correct not attempted 273selected answer correct Cashselected answer correct not attempted 8,827selected answer correct -----------------------------------------------------------------------------------