Sandra’s Store purchased merchandise from a manufacturer with an invoice price of $11,000 and credit terms of 3/10, n/60, and paid within the discount period. Required a. Prepare the journal entries that the purchaser should record for the purchase and payment. b. Prepare the journal entries that the seller should record for the sale and collection. c. Assume that the buyer borrowed enough cash to pay the balance on the last day of the discount period at an annual interest rate of 8% and paid it back on the last day of the credit period. Calculate how much the buyer saved by following this strategy. (Use a 365-day year.)
Sandra’s Store purchased merchandise from a manufacturer with an invoice price of $11,000 and credit terms of 3/10, n/60, and paid within the discount period. Required a. Prepare the journal entries that the purchaser should record for the purchase and payment. b. Prepare the journal entries that the seller should record for the sale and collection. c. Assume that the buyer borrowed enough cash to pay the balance on the last day of the discount period at an annual interest rate of 8% and paid it back on the last day of the credit period. Calculate how much the buyer saved by following this strategy. (Use a 365-day year.)
Chapter6: Merchandising Transactions
Section: Chapter Questions
Problem 4MC: If a customer purchases merchandise on credit and returns the defective merchandise before payment,...
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Question
Sandra’s Store purchased merchandise from a manufacturer with an invoice price of
$11,000 and credit terms of 3/10, n/60, and paid within the discount period.
Required
a. Prepare the
payment.
b. Prepare the journal entries that the seller should record for the sale and collection.
c. Assume that the buyer borrowed enough cash to pay the balance on the last day of
the discount period at an annual interest rate of 8% and paid it back on the last day
of the credit period. Calculate how much the buyer saved by following this strategy.
(Use a 365-day year.)
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