During the month of june, ace incorporated purchased goods from two suppliers. the sequence of events was as follows: june 3 purchased goods for $7,900 from diamond inc. with terms 2/10, n/30. 5 returned goods costing $3,000 to diamond inc. for credit on account. 6 purchased goods from club corp. for $1,950 with terms 2/10, n/30. 11 paid the balance owed to diamond inc. 22 paid club corp. in full. required: prepare journal entries to record the transactions, assuming ace records discounts using the net method in a perpetual inventory system. forfeited discounts are charged to other operating expenses

Merchandise            $7,900  Debit    

Accounts Payable  $7,900  Credit    

Accounts Payable  $3,000  Debit    

Merchandise    $3,000  Credit    

Merchandise            $1,950  Debit    

Accounts Payable  $1,950  Credit    

Accounts Payable  $4,900  Debit    

Merchandise    $98   Credit    

Cash                $4,802  Credit    

Accounts Payable  $1.950  Debit    

Cash                    $1.950  Credit    

Explanation:

First recorded the journal entry of the purchased merchandise.

Merchandise            $7,900  Debit    

Accounts Payable  $7,900  Credit    

When merchandise is returned, we make the opposite entry      

Accounts Payable  $3,000  Debit    

Merchandise    $3,000  Credit    

It's recorded again the journal entry of the purchased merchandise.  

Merchandise            $1,950  Debit    

Accounts Payable  $1,950  Credit    

When the balance is paid it's necessary to register de discount availabe becuase the payment was within 10 days, 2/10.      

Accounts Payable  $4,900  Debit    

Merchandise    $98   Credit    

Cash                $4,802  Credit    

In the case of Club Corp the paid is in full because it's out of the discount period.

Accounts Payable  $1.950  Debit    

Cash                    $1.950  Credit  

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