Purchase$-$Related Transactions

Shepherd Company purchased merchandise on account from a supplier for $$9,000,$ terms FOB shipping point, $\frac{n}{30}.$ The seller paid freight of $$75$ as an accommodation to Shepherd Company. Shepherd Company returned $$1,500$ of the merchandise before payment was made and received full credit.

a$.$ What is the amount of cash required for the payment by Shepherd Company?

$ $,x$

b$.$ Which accounts are decreased by Shepherd

Company to record the return?

x

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a$.$ The return reduces the amount owed. The discount is calculated on the outstanding balance after the return credit.

b$.$ Under a perpetual inventory system for a return, the buyer reduces the balance of both Accounts Payable and Inventory.