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College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756

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BuyFindarrow_forward

College Accounting, Chapters 1-27

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

PURCHASE TRANSACTIONS AND T ACCOUNTS Using T accounts for Cash Accounts Payable, Purchases, Purchases Returns and Allowances, Purchases Discounts, and Freight-In, enter the following purchase transactions. Identify each transaction with its corresponding letter. Use a new set of T accounts for each set of transactions, 1–4.

  1. 1. Purchase of merchandise with cash.
    1. (a) Merchandise is purchased for cash, $1,500.
    2. (b) Merchandise listed at $3,500, less a trade discount of 15%, is purchased for cash.
  2. 2. Purchase of merchandise on account with credit terms.
    1. (a) Merchandise is purchased on account, credit terms 2/10, n/30, $2,000.
    2. (b) Merchandise is purchased on account, credit terms 3/10, n/30, $1,200.
    3. (c) Payment is made on invoice (a) within the discount period.
    4. (d) Payment is made on invoice (b) too late to receive the cash discount.
  3. 3. Purchase of merchandise on account with return of merchandise.
    1. (a) Merchandise is purchased on account, credit terms 2/10, n/30, $4,000.
    2. (b) Merchandise is returned for credit before payment is made, $500.
    3. (c) Payment is made within the discount period.
  4. 4. Purchase of merchandise with freight-in.
    1. (a) Merchandise is purchased on account, $2,500 plus freight charges of $100. Terms of the sale were FOB shipping point.
    2. (b) Payment is made for the cost of merchandise and the freight charge.

1.

To determine

Post the transactions of purchases into the accounts of the general ledger, using T- accounts.

Explanation

Posting transactions: The process of transferring the journalized transactions into the accounts of the ledger is known as posting the transactions.

T-account: The condensed form of a ledger is referred to as T-account. The left-hand side of this account is known as debit, and the right hand side is known as credit.

Post the transactions of purchases into the accounts of the general ledger, using T- accounts.

Cash
  (a)1,500
  (b)2,975
    
Total0Total4,475
  Balance     $4,475

Table (1)

Working Note 1:

Compute the purchase invoice value of transaction (b)...

2.

To determine

Post the transactions of purchases and cash payments into the accounts of the general ledger, using T- accounts.

3.

To determine

Post the transactions of purchases, purchases returns and allowances, and cash payments into the accounts of the general ledger, using T- accounts.

4.

To determine

Post the transactions of purchases and cash payments into the accounts of the general ledger, using T- accounts.

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