The Stationery Company purchased merchandise on account from a supplier for $9,900, terms 1/10, n/30. The Stationery Company returned merchandise with an invoice amount of $1,300 and received full credit. a. If The Stationery Company pays the invoice within the discount period, what is the amount of cash required for the payment? $ b. Under a perpetual inventory system, what account is credited by The Stationery Company to record the return?

Part A. The cash required to payment is the inventory purchases after the sales return. And here the inventory purchases after purchase return are:

Purchases after purchase return = $9,900 - $1,300 = $8600

Now the discount available is 1%

So this implies:

Cash required = $8600 * (100-1)% = $8,514

Part B. Now the double entry under perpetual inventory system would be:

Dr Accounts Payables $86

Cr Purchase Return $86

yahayadanjuma55 yahayadanjuma55 · Answer 2 · 2020-04-04T23:42:57+02:00

Answer:

Section a. $8,514

Section b. Purchase Return

Explanation:

Section a.

To calculate the cash required, we first need to calculate Purchase after purchase return

Purchase on merchandize = $9,900

Returned merchandise = $1,300

Discount = 1 percent

Purchases after purchase return = $9,900 - $1,300 = $8,600

Purchase after purchase return = $8,600

Now let's calculate the Cash required

Which we have as;

Cash required = purchase after purchase return × (100- 1)%

Cash required = $8,600 * (100-1)% = $8,514

=$8,600×99%

=$,8,600

Section b.

Dr Accounts Payables = $86

Cr Purchase Return = $86