Taos Company purchased merchandise for resale from Tuscon Company with an invoice price of $22,800 a

Taos Company purchased merchandise for resale from Tuscon Company with an invoice price of $22,800 and credit terms of 3/10, n/60. The merchandise had cost Tuscon $15,550. Taos paid within the discount period. Assume that both buyer and seller use a perpetual inventory system.
1(a)Prepare entries that the buyer should record for the purchase.
Merchandise inventory 22800
Accounts payable 22800

1(b)Prepare entries that the buyer should record for the cash payment.
Accounts payable 22800
Merchandise inventory 684
Cash 22116
2(a)Prepare entries that the seller should record for the sale.
Accounts receivable 22800
Sales 22800
Cost of good and sold 15550
Merchandise inventory 15550
2(b)Prepare entries that the seller should record for the cash collection.
Cash 22116
Sales discounts 684
Accounts receivable 22800
Assume that the buyer borrowed enough cash to pay the balance on the last day of the discount period at an annual interest rate of 11% and paid it back on the last day of the credit period. Compute how much the buyer saved by following this strategy. (Use 365 days a year. Round your intermediate calculations and final answer to 2 decimal places. Omit the "$" sign in your response.)
Buyer's net savings $?
times
Asked Oct 13, 2012
Selling and buying a thing which is not yet totally paid by the seller could be difficult and should be manage properly with complete papers.http://tldr.me/2v18irrp
katerichards
Answered Jan 17, 2015

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