On March 1, Warwick’s Co., a women’s clothing store, purchased $73,000 of merchandise from a supplier on account, terms FOB destination, 2/10, n/30. On March 5, Warwick’s returned $9,900 of the merchandise, receiving a credit memo, and then paid the amount due on March 9, within the discount period.

Question
Asked Oct 14, 2019

On March 1, Warwick’s Co., a women’s clothing store, purchased $73,000 of merchandise from a supplier on account, terms FOB destination, 2/10, n/30. On March 5, Warwick’s returned $9,900 of the merchandise, receiving a credit memo, and then paid the amount due on March 9, within the discount period.

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Expert Answer

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Warwick Company Purchased $73000 of inventory from supplier. 2/10,n/30 means 2% discount would be given if t...

Particulars
Debit
Credit
Date
01-Mar Merchandize Inventory
To A/C Payable
|(73,000*2/100) = 1,460
(Being Clothes purchased)
71,540.00
71,540.00
05-Mar A/C Payable
8,820.00
To Merchandize Inventory
(Being Goods Returned)
8,820.00
Accounts Payable
62,720.00
To Cash
62,720.00
|(Being Payment made)
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Particulars Debit Credit Date 01-Mar Merchandize Inventory To A/C Payable |(73,000*2/100) = 1,460 (Being Clothes purchased) 71,540.00 71,540.00 05-Mar A/C Payable 8,820.00 To Merchandize Inventory (Being Goods Returned) 8,820.00 Accounts Payable 62,720.00 To Cash 62,720.00 |(Being Payment made)

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