Answer:
A. The required amount of cash payment = $9,702
B.
Explanation:
Requirement A.
Given,
Purchased merchandise = $12,600
Discount terms = 1/10, n/30
It means if the company pays within 10 days, Xanadu Company will get a 1% discount. However, the company has to pay the money within 30 days.
Again, as the company returned the merchandise of $2,800. Therefore, the remaining balance is = $(12,600 - 2,800) = $9,800.
If the company pays within the discount period,
the company has to pay = $9,800 - ($9,800 x 1%)
the required amount of cash payment = $9,800 - $98 = $9,702.
Requirement B.
The journal entry to record the return -
Under the perpetual system -
Accounts payable Debit $2,800
Inventory Credit $2,800
Under the periodic system -
Accounts payable Debit $2,800
Purchase Returns and Allowances Credit $2,800
Therefore, in both the cases, Accounts payable of $2,800 is debited by Xanadu Company to record the purchase return.
