Slinky Company Purchased Merchandise on June 10, 2009, at a Price

question 111

Essay

Slinky Company purchased merchandise on June 10, 2009, at a price of $20,000, subject to credit terms of 2/10, n30. Slinky uses the net method for recording purchases and uses a perpetual inventory system.
Required:
1. Prepare the journal entry to record the purchase.
2. Prepare the journal entry to record the appropriate payment if the entire invoice is paid on June 18, 2009.
3. Prepare the journal entry to record the appropriate payment if the entire invoice is paid on July 8, 2009.

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Definitions:

Elastic Supply

A situation in which the supply of a good or service changes significantly in response to changes in price.

Labor Supply

Refers to the total hours that workers are willing and able to work at a given wage rate, in a given period.

Deadweight Loss

The drop in economic efficiency due to the inability or failure of a good or service to reach its equilibrium state.

Government Revenue

The total income received by the government from taxes, fees, and non-tax sources like government-owned enterprises and foreign aid.