Q2. ABC uses a perpetual inventory system. The following are the merchandising transactions of the...
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Q2. ABC uses a perpetual inventory system. The following are the merchandising transactions of the company: Jan 5--- The Company purchased 50 units of telescopes from XYZ Company at a cost price of $ 100 per unit, for a total of $5000. The terms of purchase were 2/10, n/30. Jan 10, it returned 5 telescopes to XYZ since the items were defective. XYZ allowed for the full credit for this return. Jan 15-ABC Company paid for the account payable within the discount period. Jan 16-ABC sold 10 telescopes out of its purchases to a regular customer on credit for a sale price of $125 per unit, for a total of $1250. The terms of sale were 1/10, n/30. Jan 20The customer returned 2 telescopes to ABC company since they were of wrong type. Jan 26-ABC collected its remaining account receivable within discount period. Required: Prepare journal entries to record these transactions assuming company records purchases at Net cost and sales at Gross Invoice price
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