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College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756

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Chapter
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BuyFindarrow_forward

College Accounting, Chapters 1-27

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

JOURNALIZING PURCHASES TRANSACTIONS Journalize the following transactions in a general journal:

May 3    Purchased merchandise from Reed, $6,100. Invoice No. 321, dated May 1, terms n/30.

9    Purchased merchandise from Omana, $2,500. Invoice No. 614, dated May 8, terms 2/10, n/30.

18    Purchased merchandise from Yao Distributors, $2,200. Invoice No. 180, dated May 15, terms 1/15, n/30.

23    Purchased merchandise from Brown, $5,300. Invoice No. 913, dated May 22, terms 1/10, n/30.

To determine

Journalize the transactions related to purchases transactions.

Explanation

Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Debit and credit rules:

  • Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts.
  • Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts.

Journalize the transactions related to purchases transactions.

Transaction on May 3:

DateAccount Titles and ExplanationPost Ref.Debit ($)Credit ($)
May3Purchases 6,100 
   Accounts Payable, R  6,100
  (Record purchases made on account)   

Table (1)

Description:

  • Purchase is an expense account which records the cost of inventory purchased. An increase in expense reduces the equity value, and a decrease in equity is debited.
  • Accounts Payable, R is a liability account. Since the payable increased, the liability increased, and an increase in liability is credited.

Transaction on May 9:

DateAccount Titles and ExplanationPost Ref.Debit ($)Credit ($)
May9Purchases 2,500 
   Accounts Payable, O  2,500
  (Record purchases made on account)   

Table (2)

Description:

  • Purchase is an expense account which records the cost of inventory purchased...

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