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23 November, 23:03

A company purchased $3,200 of merchandise on July 5 with terms 2/10, n/30. On July 7, it returned $900 worth of merchandise. On July 12, it paid the full amount due. Assuming the company uses a perpetual inventory system, and records purchases using the gross method, the correct journal entry to record the payment on July 12 is:

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  1. 23 November, 23:24
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    The correct journal entry is as follows

    Accounts payable A/c Dr $2,300

    To Cash A/c $2,254

    To Merchandise Inventory A/c $46

    (Being due amount is paid and the remaining balance is credited to the cash account)

    It is computed below:

    For account payable

    = $3,200 - $900

    = $2,300

    For Merchandise inventory

    = ($3,200 - $900) * 2%

    = $46
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