QS 4-5 (Algo) Recording purchases, returns, and discounts taken LO P1

Prepare journal entries to record each of the following transactions of a merchandising company. The company uses a perpetual inventory system and the gross method.

Nov.		5		Purchased 1,100 units of product at a cost of $40 per unit. Terms of the sale are 5/10, n/60; the invoice is dated November 5.
Nov.		7		Returned 25 defective units from the November 5 purchase and received full credit.
Nov.		15		Paid the amount due from the November 5 purchase, minus the return on November 7.

No Date General Journal Debit Credit 1 Nov 05 44,000 Merchandise inventory Accounts payable 44,000 o 2 Nov 07 250 X Accounts payable Merchandise inventory 250 X 3 Nov 15 Accounts payable 43,750 X Cash 42,875 X Merchandise inventory 875