how to make journal entries for this? ATTN recently won a new client, ErgSaph Co

Question

how to make journal entries for this?

ATTN recently won a new client, ErgSaph Co., by offering them a reduced sales price on one of their most popular products. They also offered ErgSaph special payment terms of3/10, n/3o, with the discount applying to any portion of their balance paid within the 1o days. ErgSaph's purchasing department was so pleased with the new agreement that they placed a large order on March 14, Year 5. The details of the purchase are provided in the table below ATTN expects to receive the Normal Purchase Price Sales Price Cost per Unit Units Ordered Gross amount of the sales price $130.00 $117.00 $110.50 2,500 Make the necessary journal entries to record ErgSaph's original purchase, the payment of 40% of the bill on March 22nd, and the payment of the remainder of the bill on March 30th. ATTN uses the perpetual inventory system. ATTN reports only net sales revene on its Income Statement. Any contrarevenue or additional discount forfeited revenue should be included in that net amount.

Explanation / Answer

Journal Entries in books of Seller shall be as hereunder:

NOTE: Under perpetual inventory system inventory records keep getting updated with each transactions and hence the Purchase Price of the material may not be same as the moving average price of inventory.Cost of Goods sold has thus been charge at cost per unit which has been assumed to be moving average price.

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