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Accounting (Text Only)

26th Edition
Carl Warren + 2 others
ISBN: 9781285743615

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BuyFindarrow_forward

Accounting (Text Only)

26th Edition
Carl Warren + 2 others
ISBN: 9781285743615
Textbook Problem
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Purchase-related transactions

Based on the data presented in Excrd.sc 6-14, journalize Ha I boa Co.’s entries for (a) the purchase, (b) the return of the merchandise for credit, and (c) the payment of the invoice.

To determine

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

To Describe: The purchase of merchandise inventory on account under the terms of n/30.

Explanation

(a)

Record the purchase of merchandise inventory on account.

Date Account Title and Explanation Post Ref.

Debit

($)

Credit

($)

  Merchandise Inventory   254,500  
  Accounts Payable     254,500
  (To record purchases of inventory on account)      

Table (1)

Explanation:

  • Merchandise inventory is an asset and it is increased by $254,500 due to purchase of inventory. Therefore, debit inventory account with $254,500.
  • Accounts payable is a liability and it is increased by $254,500 due to purchase of inventory on account. Therefore, credit accounts payable account with $254,500.

(b)

Record the journal entry for purchase returned.

Journal Entry
Date Account Title and Explanation Post Ref.

Debit

($)

Credit

($)

  Accounts Payable   30,000  
  Merchandise Inventory     30,000
  (To record the purchases return)      

Table (2)

Explanation:

  • Accounts payable is a liability and it is decreased by $30,000 due to return of merchandise inventory...

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PAYROLL ACCT.,2019 ED.(LL)-TEXT