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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 Grant’s Distributors on June 12. The purchase price was $5,000, less a 10% trade discount and credit terms of 3/10, 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 June 12 and the payment on June 22 (within the discount period) in a general journal.

1.

To determine

Compute the purchase invoice value.

Explanation

Compute the purchase invoice value.

Purchase invoice value = List price–Trade discount= $5,000–($5,000

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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