a company purchased $3,100 of merchandise on july 5 with terms 2/10, n/30. on july 7, it returned $850 worth…

a company purchased $3,100 of merchandise on july 5 with terms 2/10, n/30. on july 7, it returned $850 worth of merchandise. on july 12, it paid the full amount due. assuming the company uses a perpetual inventory system, and records purchases using the gross method, the correct journal entry to record the payment on july 12 is:\n\ndebit accounts payable $2,250; credit cash $2,250.\ndebit accounts payable $3,100; credit cash $3,100.\ndebit merchandise inventory $2,250, credit cash $2,250.\ndebit accounts payable $2,250; credit merchandise inventory $45; credit cash $2,205.\ndebit cash $2,250, credit accounts payable $2,250.

a company purchased $3,100 of merchandise on july 5 with terms 2/10, n/30. on july 7, it returned $850 worth of merchandise. on july 12, it paid the full amount due. assuming the company uses a perpetual inventory system, and records purchases using the gross method, the correct journal entry to record the payment on july 12 is:\n\ndebit accounts payable $2,250; credit cash $2,250.\ndebit accounts payable $3,100; credit cash $3,100.\ndebit merchandise inventory $2,250, credit cash $2,250.\ndebit accounts payable $2,250; credit merchandise inventory $45; credit cash $2,205.\ndebit cash $2,250, credit accounts payable $2,250.

Answer

Explanation:

Step1: Calculate net amount due

The company purchased $3100 of merchandise and returned $850 worth. So the net amount due before discount is $3100 - 850=2250$.

Step2: Analyze payment terms

The terms are 2/10, n/30. The company paid on July 12 which is within the 10 - day discount period. The discount amount is $2250\times0.02 = 45$. The cash paid is $2250-45 = 2205$.

Step3: Determine journal - entry accounts

When paying, Accounts Payable is debited for the full amount due before discount ($2250), Merchandise Inventory is credited for the discount amount ($45) (as the cost of inventory is reduced due to the discount), and Cash is credited for the amount actually paid ($2205).

Answer:

Debit Accounts Payable $2,250; credit Merchandise Inventory $45; credit Cash $2,205.