Explanation Purchases is an activity of acquiring the merchandise inventory of a business. a. Record the purchase of merchandise inventory on account. Date Account Title and Explanation Post Ref. Debit ($) Credit ($) Merchandise Inventory 88,200 Accounts Payable 88,200 (1) (To record purchases of inventory on account after discount) Table (1) Working Note (1) : Calculate the amount of accounts payable. Purchases = $90,000 Discount Percentage = 2% Amount of accounts payable } = Purchases − Discount = Purchases − ( Purchases × 2 % ) = $90,000 – ( $ 90 , 000 × 2 % ) = $90,000 − $ 1 , 800 = $ 88 , 200 Merchandise inventory is an asset and it is increased by $88,200. Therefore, debit inventory account with $88,200. Accounts payable is a liability and it is increased by $88,200. Therefore, credit accounts payable account with $88,200. b. Record the journal entry for the due amount paid. Journal Entry Date Account Title and Explanation Post Ref. Debit ($) Credit ($) Accounts Payable 88,200 Cash 88,200 (To record paying cash on purchases after discounts and returns) Table (2) Accounts payable is a liability and it is decreased by $88,200. Therefore, debit accounts payable account with $88,200. Cash is an asset and it is decreased by $88,200. Therefore, credit cash account with $88,200. c. Record the journal entry for purchase returned for damaged goods. Journal Entry Date Account Title and Explanation Post Ref. Debit ($) Credit ($) Accounts Receivable 17,640 Merchandise Inventory 17,640 (2) (To record the purchases return) Table (3) Accounts receivable is an asset and it is increased by $17,640. Therefore, debit accounts receivable account with $17,640. Merchandise inventory is an asset and it is decreased by $17,640. Therefore, credit inventory account with $17,640

15th Edition

ISBN: 9781337272124

Author: Carl Warren, James M. Reeve, Jonathan Duchac

Publisher: Cengage Learning

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Chapter 6, Problem 8E

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Record the purchase of merchandise inventory on account under the terms of 2/10, n/30.

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journalize entries for the following related transactions of greenville heating & air company: a. purchased $33,000 of merchandise from foster co., on account terms 2/10, n 30 b. paid the amount owed on the invoice within the discount period. c. Discovered that $6,600 of the purchased in (a) was defective and returned items, receiving credit for $6,468 ($6,600-($6,600 x2%) ).d. purchased $5,400 of merchandise from foster co., on account, terms n/30. e. received a refund from foster co., in (c) less the purchase in d.

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Journalize entries for the following related transactions of Lilly Heating & Air Company. Refer to the Chart of Accounts for exact wording of account titles. A. Purchased $36,000 of merchandise from Schell Co. on account, terms 1/10, n/30. B. Paid the amount owed on the invoice within the discount period. C. Discovered that $9,000 of the merchandise purchased in (A) was defective and returned items, receiving credit. D. Purchased $5,000 of merchandise from Schell Co. on account, terms n/30. E. Received a refund from Schell Co. for return in (C) less the purchase in (D). CHART OF ACCOUNTS Lilly Heating & Air Company General Ledger ASSETS 110 Cash 120 Accounts Receivable 125 Notes Receivable 130 Inventory 140 Office Supplies 141 Store Supplies 142 Prepaid Insurance 180 Land 192 Store Equipment 193 Accumulated Depreciation-Store Equipment 194 Office Equipment 195 Accumulated Depreciation-Office Equipment…

Chapter 6 Solutions

Financial Accounting

Ch. 6 - Prob. 1DQ Ch. 6 - Can a business earn a gross profit but incur a net...Ch. 6 - The credit period during which the buyer of...Ch. 6 - What is the meaning of (a) 1/15, n/60; (b) n/30;...Ch. 6 - Prob. 5DQ Ch. 6 - Prob. 6DQ Ch. 6 - Prob. 7DQ Ch. 6 - Name four accounts that would normally appear in...Ch. 6 - Prob. 9DQ Ch. 6 - Assume that Audio Outfitter Inc. in Discussion...

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Record the purchase of merchandise inventory on account under the terms of 2/10, n/30.

Solution Summary: The author explains how to record the purchase of merchandise inventory on account under the terms of 2/10, n/30.

Record the purchase of merchandise inventory on account under the terms of 2/10, n/30.

Chapter 6 Solutions