Purchases Transactions Rolfes Company purchased merchandise on account from a supplier for $12, 800, terms 1/10, n/30. Rolfes Company returned $3, 100 of the merchandise and received full credit

A. If Rolfes Company pays the invoice within the discount period, what is the amount of cash required for the payment? If required, round the answer to the nearest dollar. $

B. What account is credited by Rolfes Company to record the return?

Answers:

A) Answer is $ 9603 Calculation is as follows:-

1/10, n/30 means if company pay in 10 days they will get cash discount of 1% otherwise payment will be due in 30 days without any discount.

Here Company Purchased for $12800 and returned goods worth $3100 and got credit for the same so Balance Payment Due is

12800-3100= $9700

On payment within discount period Company will get 1% discount so Discount is

9700 X 1%= $97

Payment Required to be Made:-

9700-97= $9603

B) Journal entry would be:-

Creditors A/c...Dr 3100
To Purchase Returns A/c 3100

So Credit would be to Purchase Return Account.

Note: Some Companies don't make Purchase Return A/c they directly Credit the Returns to Purchase A/c so if you are having Purchase Return A/c in your List then Select that otherwise Purchase A/c.