Purchase-Related Transactions Journalize entries for the following related transactions of Lilly Heating & Air Company who uses the net method under a perpetual inventory system. (If an amount box does not require an entry, leave it blank.) a. Purchased $33,000 of merchandise from Schell Co. on account, terms 2/10, n/30. Inventory Accounts Payable-Schell Co. Feedback b. Paid the amount owed on the invoice. Accounts Payable-Schell Co. Cash Feedback Check My Work b. A payment of the invoice within the discount period reduces Accounts Payable and Cash for the amount of the invoice less the discount. C. Discovered that merchandise with an invoice amount of $6,600 purchased in (a) was defective and returned items, receiving credit. Accounts Payable-Schell Co. Inventory Feedback Check My Work c. This transaction reduces Inventory and the Accounts Payable. Since this return was made after payment was made at the discounted price, the credit will be for the cost of returned goods less the discount