Answer:
a. Entries for each transaction on the books of Tuzun Company
On June 10,
Debit Merchandise $8,000
Credit Accounts Payable $8,000
On June 11:
Debit Freight in $400
Credit Cash $400
On June 12:
Debit Accounts Payable $300
Credit Merchandise $300
On June 19:
Debit Accounts Payable $7,700
Credit Purchase discount $154
Credit Cash $7,546
b. Entries in Epps Company
On June 10:
Debit Account Receivable $8,000
Credit Sales $8,000
Debit Cost of goods sold $4,800
Credit Merchandise $4,800
On June 12:
Debit Sales $300
Credit Account Receivable $300
Debit Merchandise $70
Credit Cost of goods sold $70
On June 19:
Debit Cash $7,546
Debit Sales Discount $154
Credit Account Receivable $7,700
Explanation:
Credit terms of 2/10, n/30 means that 2% discount for the payment within 10 days and the full amount to be paid within 30 days.
a. Entries for each transaction on the books of Tuzun Company
On June 10,
Debit Merchandise $8,000
Credit Accounts Payable $8,000
On June 11:
Debit Freight in $400
Credit Cash $400
On June 12:
Debit Accounts Payable $300
Credit Merchandise $300
On June 19:
Tuzun pays and takes the appropriate discount:
2% x ($8,000 - $300) = $154
Cash Epps Company receives: $7,700-$154 = $7,546
The journal entry that Tuzun make:
Debit Accounts Payable $7,700
Credit Purchase discount $154
Credit Cash $7,546
b. Entries in Epps Company
On June 10:
Debit Account Receivable $8,000
Credit Sales $8,000
Debit Cost of goods sold $4,800
Credit Merchandise $4,800
On June 12:
Debit Sales $300
Credit Account Receivable $300
Debit Merchandise $70
Credit Cost of goods sold $70
On June 19:
Debit Cash $7,546
Debit Sales Discount $154
Credit Account Receivable $7,700
