Santa Fe Retailing purchased merchandise "as is" (with no returns) from Mesa Wholesalers with credit terms of 3/10, n/60 and an invoice price of $24,000. The merchandise had cost Mesa $16,000. Assume that both buyer and seller use a perpetual inventory system and the gross method.

The entries prepared recorded by the buyer and the seller is provided below.

Explanation:

1. Prepare entries that the buyer records for the (a) purchase, (b) cash payment within the discount period, and (c) cash payment after the discount period.

(a) Credit Purchase

(b) Cash payment within the discount period

(c) Cash payment after the discount period

2. Prepare entries that the seller records for the (a) sale, (b) cash collection within the discount period, and (c) cash collection after the discount period.

(a) Credit sale

COGS entry

(b) Cash collection within the discount period

(c) Cash collection after the discount period

answer; the nav calculated at the market close at 4: 00 pm new york time;

answer; read and consider the content of the items;