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M. Freeman received an invoice from D. Wayans Reproduction Automotive Parts. The invoice stated the total of $52,000 for twelve pairs of Corvette fenders with the terms 2/10, n/30 printed at the bottom.

Please use the information in the preceding question regarding M. Freeman's purchase of auto parts from D. Wayans.
If Freeman utilizes the perpetual inventory method and pays their invoice, utilizing the discount noted in the terms, what would be the journal entry to record the payment?
M. Freeman Automotive Repair Item
Account Name/Post Ref/Debit/Credit
1.
Cash
$52,000
Merchandise Inventory
$52,000
2.
Accounts Payable
$52,000
Merchandise Inventory
$1,040
Cash
$50,960
3.
Accounts Payable
$44,200
Cash
$36,400
Discount on Accounts Payable
$7,800
4.
Accounts Payable
$44,200
Cash
$44,200

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Solution Summary

The expert uses the information in the preceding question regarding M. Freeman's purchase of auto parts from D. Wayans.
If Freeman utilizes the perpetual inventory method and pays their invoice, utilizing the discount noted in the terms, what would be the journal entry to record the payment is provided.

Solution Preview

2.
Accounts Payable
$52,000
Merchandise Inventory ...

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