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College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570

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BuyFindarrow_forward

College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570
Textbook Problem

For the following purchases of merchandise, determine the amount of cash to be paid.

images

To determine

Calculate the amount of cash to be paid for purchase of merchandise.

Explanation

a. Calculate the payment of cash for purchase of merchandise.

 The purchase of merchandise is $550 because cash is not paid within the discount period.

 b. Calculate the payment of cash for purchase of merchandise.

Calculate the net purchase.

 Net Purchase=(Amount of purchasePurchase returns and allowances)=$700$100=$600

Calculate the purchase discount.

Purchase Discount=(Net purchase ×Trade discount)=$600×1%=$6

Calculate the purchase payment.

Purchase Payment =(Net purchasePurchase discount)=$600$6=$594

c. Calculate the payment of cash for purchase of merchandise.

Calculate the total invoice amount.

Total Invoice Amount=(Amount purchase+Freight charges)=$940+$60=$1,000

Calculate the Purchase Discount

Purchase Discount =(Amount purchase ×Trade discount)=$940×2%=$18.80

Calculate the Purchase payment.

Purchase Payment=(Amount of purchase Purchase Discount)=$1,00018

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