Juniper company uses a perpetual inventory system and the gross method of accounting for purchases. the company purchased $9,750 of

Juniper company uses a perpetual inventory system and the gross method of accounting for purchases. the company purchased $9,750 of merchandise on august 7 with terms 1/10, n/30. on august 11, it returned $1,500 worth of merchandise, on august 16, it paid the full amount due. the correct journal entry to record the purchase on august 7 is: a) debit merchandise inventory $9,750; credit cash $9.750. b) debit accounts payable $9.750; credit merchandise inventory $9,750. c) debit merchandise inventory $9,750; credit sales returns $1,500; credit cash $8,250 d) debit merchandise inventory $9,750; credit accounts payable $9,750. e) debit accounts payable $8,250; debit purchase returns $1,500; credit merchandise inventory $9,750.

Answers

Correct journal entry is;

Dr Accounts payable $1,500

Cr Inventory $1,500

Explanation:

Using perpetual inventory system, purchase returns made by Juniper on August 11 will cause their actual inventory on hand and accounts payable less than to its record. As a result, Juniper should recognize the return by debiting accounts payable and crediting inventory in the amount of $1,500. Purchase return and allowances should be directly charged against inventory account in perpetual inventory system method.

Dr Accounts Payable $8,250

Dr Purchase Returns $1,500

Cr MerchandiseInventory $9,750

Explanation:

Since we were told that Juniper Company made purchased of the sum of $9,750 of the merchandise on August 7 which has a terms of 1/10, n/30 and On August 11, it returned the sum of $1,500 worth of the merchandise in which the company fully paid the amount due On August 16 this means we have to record the payment on August 16 by Debiting Accounts Payable with the sum of $8,250 ($9,750-$1,500), Debit Purchased returns with $1,500 and Credit Merchandise Inventory with $9,750.

Dr Accounts Payable $8,250

($9,750-$1,500)

Dr Purchase Returns $1,500

CrMerchandiseInventory $9,750

Explanation:

The term of transaction is 1/10 , n 30

This means that if Juniper pays up for the merchandise within 10 days after purchase , it is entitled to 1 % of the invoice value or else he should pay up the entire invoice value without a discount not late than 30 days after the purchase.

If the date of transaction is August 7 and the payment day is August 16 , which is 9 days interval , this means that Juniper is entitled to 1% discount

Workings

Inventory purchased =9,750

Returns =                     (1,500)

                                     8,250

Entitled discount = 1%   (82.5)

Final payment              8,167.5

B

The journal entry for the returned merchandise

Debit account payable  $1,500

Credit Merchandise inventory $1,500

The answer is: D) Debit Accounts Payable $1500; Credit Merchandise Inventory $1500

Explanation:

The correct records should be:

Dr Accounts Payable account 1,500

Cr Merchandise Inventory account 1,500

Accounts Payable is a liability, and when liabilities decrease (the returned merchandise reduces the debt), they should be debited.

Merchandise Inventory is an asset, and when assets decrease (some merchandise was returned), they should be credited.

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Explanation:

The answer is: D) Debit Accounts Payable $1500; Credit Merchandise Inventory $1500

Explanation:

The correct records should be:

Dr Accounts Payable account 1,500Cr Merchandise Inventory account 1,500

Accounts Payable is a liability, and when liabilities decrease (the returned merchandise reduces the debt), they should be debited.

Merchandise Inventory is an asset, and when assets decrease (some merchandise was returned), they should be credited.

The journal entries are as follows:

(i) On August 7,

Merchandise inventory A/c Dr. $9,750

           To accounts payable A/c           $9,750

(To record the purchase of merchandise on account)

(ii) On August 11,

Accounts payable A/c Dr. $1,500

         To merchandise inventory A/c $1,500

(To record the merchandise return)

(iii) On August 26,

Accounts payable A/c ($9,750 – $1,500) Dr. $8,250

        To cash A/c                                                         $8,250

(To record the payment in cash)

The journal entries for the whole transaction are:

August 7, 202x, merchandise purchased on account, terms 1/10, n/30

Dr Merchandise inventory 9,750

    Cr Accounts payable 9,750

August 11, 202x, partial return of purchased merchandise

Dr Accounts payable 1,500

    Cr Merchandise inventory 1,500

August 16, 202x, invoice is paid within discount period

Dr Accounts payable 8,250

    Cr Cash 8,167.50

    Cr Purchase discounts 82.50

The journal entries to record the purchase and payment of the merchandise should be:

August 7, merchandise purchased, terms 1/10, n/30

Dr Merchandise inventory 9,750

    Cr Accounts payable 9,750

August 11, $1,500 worth of merchandise is returned

Dr Accounts payable 1,500

    Cr Merchandise inventory 1,500

August 26, invoice is paid at full amount since discount period expired

Dr Accounts payable 8,250

    Cr Cash 8,250

Due to the return of merchandise Juniper Company needs to shift some numbers around to make sure the correct journal entry is in place. To do so, Juniper Company will debit $1,500 from Accounts Payable. Next, they will place a credit to of $1,500 to Merchandise Inventory. 

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