JournaldrillPurchase discount taken
A journal entry exercise from Journaldrill. Solve it with an account picker and debit and credit fields in your browser, and it is checked the moment you submit.
The task
Brightwater Home Goods bought $6,000 of merchandise on account, terms 2/10, n/30, and recorded it at the gross amount. Two days later it returned $500 of the goods and recorded the return. It now pays the remaining balance within the discount period. Brightwater uses a perpetual inventory system.
What this exercise teaches
The balance owed after the return is $5,500 ($6,000 - $500), and the 2% discount is $110, so the cash paid is $5,390. Accounts Payable is debited for the full $5,500 to clear it. In a perpetual system the $110 discount reduces the cost of the goods, so Inventory is credited instead of a Purchase Discounts account.
A hint if you get stuck
Clear the remaining payable in full, pay less than that in cash, and let the savings lower the cost of the goods.
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