Morgan, inc. uses a perpetual inventory system and the net method of recording purchases. on may 12, a merchandise purchase of $15,000 was made on credit, 2/10, n/30. the journal entry to record this purchase is:

The purchase of merchandise on credit should be recorded by debiting the merchandise inventory account and crediting the accounts payable.

Further Explanation:

Recording of purchase of goods on credit:

Net method of inventory recording:

In the net method of inventory, the inventory should be recorded after the effect of the cash discount. This method assumes that the customer would take advantage of the discounted price. The total value of the inventory should be recorded after adjusting the cash discount.

Record the journal entry for the purchase of merchandise:

The inventory account should be debited by $14,700 and accounts payable should be credited by $14,700.

Working note 1:

Calculate the net purchase value:

Working  note 2:

Calculate the cash discount:

In the case, there is a cash discount of 2% for the payment within 10 days. So the cash discount should be calculated on the purchase price ($15,000).  

Learn more:

1.Learn more about journal entry of petty cash book

2.Learn more about the production of the goods  

3.Learn more about the inventory accuracy

Answer details:

Grade: Senior School

Subject: Accounting

Chapter: Inventory costing

Keywords: Morgan, Inc., uses perpetual, inventory system, and the, net method, recording, purchases, On May 12, merchandise, purchase of, $15,000, was made, credit, 2/10, n/30, journal entry, to, record, this, purchase, inventory recording, accounting.

Record the journal entry for the purchase of merchandise: