Purchase-Related Transactions

Milan Co., a women's clothing store, purchased $120,000 of merchandise from a supplier on account, termsFOB destination, 2/10, n/30. Milan Co. returned $16,000 of the merchandise, receiving acredit memorandum, and then paid the amount due within the discount period. Illustrate the effects on the accounts and financial statements of Milan Co. to record the following transactions. If no account or activity is affected, select "No effect" from the dropdown and leave the corresponding number entry box blank. Enter account decreases and cash outflows as negative amounts.

a.The purchase