BuyFindarrow_forward

College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756

Solutions

Chapter
Section
BuyFindarrow_forward

College Accounting, Chapters 1-27

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

Under the net-price method, if payment for merchandise is not made within the discount period, what accounts are debited when the payment is made?

To determine

Indicate the accounts that are debited under net-price method, when the cash is paid for merchandise purchased after the discount period.

Explanation

Net-price method: The method of recording the inventory purchases at net of purchase discounts is referred to as net-price method.

Purchase discounts: The sellers offer a reduction in purchase price on initial purchases, to accelerate the collection of on account purchases, by their customers, within the purchase terms promptly. Such a reduction in purchase price is referred to as purchase discount.

Accounting treatment method: Under net-price method, the purchase discounts would be deducted from the gross purchases amount, and the net purchases amount is recorded. Discount Lost is the expense account that is recorded when the merchandise purchased is on account and the invoice is not paid within the discount period.

Journal entry for the discounts lost:

DateAccount Titles and ExplanationPost Ref...

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

Why must researchers document their sources meticuousIy?

Essentials of Business Communication (MindTap Course List)

CROSS RATES Use the foreign exchange section of a current issue of The Wall Street journal to look up the three...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)