The Wheatland Company purchased merchandise on account from a supplier for $30,000, terms 1/10, n/30

The Wheatland Company purchased merchandise on account from a supplier for $30,000, terms 1/10, n/30. The Wheatland Company returned $8,000 of the merchandise and received full credit.

a. What is the amount of cash required for the payment within the discount period?

b. Under a perpetual inventory system, what account is credited by The Wheatland Company to record the return?

Answer:

a. $21,780. Purchase of $29,700 [$30,000 – ($30,000 × 1%)], less return of $7,920 [$8,000 – ($8,000 × 1%)] 

b. Merchandise Inventory