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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:

Jan. 3    Purchased merchandise from Feng, $6,000. Invoice No. 416, dated January 1, terms 2/10, n/30.

12    Purchased merchandise from Miranda, $9,000. Invoice No. 624, dated January 10, terms n/30.

Jan. 19    Purchased merchandise from J. B. Barba, $6,400. Invoice No. 190, dated January 18, terms 1/10, n/30.

26    Purchased merchandise from Ramirez, $3,700. Invoice No. 923, dated January 25, terms 1/15, 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 January 3:

DateAccount Titles and ExplanationPost Ref.Debit ($)Credit ($)
January3Purchases 6,000 
   Accounts Payable, F  6,000
  (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, F is a liability account. Since the payable increased, the liability increased, and an increase in liability is credited.

Transaction on January 12:

DateAccount Titles and ExplanationPost Ref.Debit ($)Credit ($)
January12Purchases 9,000 
   Accounts Payable, M  9,000
  (Record purchases made on account)   

Table (2)

Description:

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

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