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College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756

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Chapter
Section
BuyFindarrow_forward

College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756
Textbook Problem

TRADE DISCOUNT AND CASH DISCOUNTS Merchandise was purchased on account from Jacob’s Distributors on May 17. The purchase price was $2,000, less a 10% trade discount and credit terms of 2/10, n/30.

  1. 1. Calculate the net amount to record the invoice, less the 10% trade discount.
  2. 2. Calculate the amount to be paid on this invoice within the discount period.
  3. 3. Journalize the purchase of the merchandise on May 17 in a general journal. Journalize the payment on May 27 (within the discount period).

1.

To determine

Compute the purchase invoice value.

Explanation

Compute the purchase invoice value.

Purchase invoice value = List price–Trade discount= $2,000–($2,000

2.

To determine

Compute the net amount of cash to be paid for the purchases.

3.

To determine

Journalize the transactions related to the purchase and payment of merchandise.

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