A Merchandiser, Following the Perpetual Inventory System, Has the Following

question 96

Essay

A merchandiser, following the perpetual inventory system, has the following transactions during August, 2019:
$$\begin{array} { l l l } \text { Date } & \text { Trancection } & \text { Amount } \\\hline \text { Aug. 5 } & \text { Purchased inventory on account } & \$ 300,000 \\\text { Aug. 9 } & \text { Paid for transportation of goods purchased } & 25,000 \\\text { Aug. 10 } & \text { Returned defective merchandise to the seller } & 20,000 \\\text { Aug. 15 } & \text { Paid for goods purchased on August 5 } & \text { ? }\end{array}$$ Credit terms of invoice are 2/15, n/45. Prepare journal entries for the above transactions. Omit explanations.

---

Definitions:

Levered

Refers to the use of debt (borrowed funds) to amplify the potential return of an investment.

Bankruptcy

A legal proceeding involving a person or business that is unable to repay their outstanding debts, leading to the assets being allocated to creditors.

Indirect Costs

Expenses that are not directly attributable to a specific product or activity but are necessary for the business's operation, such as utilities or administrative salaries.

Financial Distress

A scenario in which a corporation is unable to fulfill or struggles with settling its debts to those it owes money.