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Purchases transactions Hoffman Company purchased merchandise on account from a supplier for $65,000, terms 1/10, n/30. Hoffman returned $7,500 of the merchandise and received full credit. A. If Hoffman Company pays the invoice within the discount period, what is the amount of cash required for the payment? B. What account is debited by Hoffman Company to record the rerurn?

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Corporate Financial Accounting

14th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781305653535

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Chapter
Section
BuyFindarrow_forward

Corporate Financial Accounting

14th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781305653535
Chapter 5, Problem 5.2BE
Textbook Problem
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Purchases transactions

Hoffman Company purchased merchandise on account from a supplier for $65,000, terms 1/10, n/30. Hoffman returned $7,500 of the merchandise and received full credit.

A. If Hoffman Company pays the invoice within the discount period, what is the amount of cash required for the payment?

B. What account is debited by Hoffman Company to record the rerurn?

(a)

To determine

Purchases is an activity of acquiring the merchandise inventory of a business.

To Calculate: The requirement of cash to pay the merchandise purchased on account.

Explanation of Solution

Calculate the cash requirement for payment of merchandise purchased on account.

Merchandise purchased on account = $65,000 (Merchandise worth $7,500 returned and received full)

Discount percentage = 1% (Term 1/10, n/30 )

Cash required = Merchandise purchased on accountDiscount=[Merchandise purchased on account(Merchandise purchased on account

(b)

To determine

To Name: The account that is debited by Company H to record the return.

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Chapter 5 Solutions

Corporate Financial Accounting
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