The Wheatland Company purchased merchandise on account from a supplier for $15,700, terms 1/10, n/30. The Wheatland Company returned $1,900 of the merchandise and received full credit. a. What is the amount of cash required for the payment within the discount period? $ b. Under a perpetual inventory system, what account is credited by The Wheatland Company to record the return?

a. $13,662

b. Merchandise inventory

Explanation:

a. The amount of cash required of the payment within the discount period is shown below:

= Purchase value of merchandise - returned goods - discount

where,

Discount is

= ($15,700 - $1,900) × 1%  

= $138

So, the amount of cash is

= $15,700 - $1,900 - $138

= $13,662

b. The account that is credited for record the return of the inventory is merchandise inventory account

The journal entry is shown below:

Account payable A/c Dr

    To Merchandise inventory A/c

(Being returned inventory is recorded)

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