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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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Purchases transactions

Hoffman Company purchased merchandi.se on account from a .supplier for $65,000, terms 1/10, n/30. Hoffman Company 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 return?

(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 during the discount period.

Explanation

Calculate the cash requirement for payment of merchandise purchased on account during the discount period after the purchase return of $7,500.

Merchandise purchased on account = $65,000

Purchase returns = $7,500

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

Cash required = Netmerchandise purchased on accountDiscount=[(Merchandise purchased on accountPurchase returns)(Netmerchandis

(b)

To determine

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

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