Explanation Journalizing: Journalizing refers to that process in which the transactions of an organization are recorded in a sequence. Based on the recorded entries, the accounts are posted to the relevant ledger accounts. The general journal is prepared for recoding the transactions is as follows: Recording the purchases on credit: GENERAL JOURNAL Page 1 Date Account Title and Explanation Post Ref. Debit ($) Credit ($) September 2, 2019 Purchases 6,600 Freight In 310 Accounts payable/Shop CS 6,910 (to record the inventory purchased on account with terms n/30) Table (1) • The purchases account is an expense account. The purchases account has normal debit balance and the balance is increasing. Therefore, it is debited. • The freight In account is an expense account and it has normal debit balance which is increasing. Therefore, freight In account is debited. • The accounts payable account is credited. This is because the accounts payable account is a liability account and its balance is increasing. Recording the purchases on credit: GENERAL JOURNAL Page 1 Date Account Title and Explanation Post Ref. Debit ($) Credit ($) September 3, 2019 Purchases 12,200 Accounts payable/Company AS 12,200 (to record the inventory purchased on account with terms3/10, n/30) Table (2) • The purchases account is an expense account. The purchases account has normal debit balance and the balance is increasing. Therefore, it is debited. • The accounts payable account is a liability account and its balance is increasing. Therefore, it is credited. Recording the purchases returned and credit memorandum received: GENERAL JOURNAL Page 1 Date Account Title and Explanation Post Ref. Debit ($) Credit ($) September 7, 2019 Accounts payable/Shop CS 1,000 Purchases returns and allowances 1,000 (to record the inventory returned and credit memorandum received) Table (3) • The accounts payable account is a liability account. The accounts payable account has the normal credit balance and it is decreasing. Therefore, it is debited. • The purchase returns and allowances account is contra expenses account. The account has the normal credit balance and it is increasing. Therefore, it is credited. Recording the purchases on credit: GENERAL JOURNAL Page 1 Date Account Title and Explanation Post Ref. Debit ($) Credit ($) September 11, 2019 Purchases 5,000 Accounts payable/Company CMC 5,000 (to record the inventory purchased on account with termsn/30) Table (4) • The purchases account is an expense account. The purchases account has normal debit balance and the balance is increasing. Therefore, it is debited. • The accounts payable account is credited. This is because the accounts payable account is a liability account and its balance is increasing. Recording the payment made: GENERAL JOURNAL Page 1 Date Account Title and Explanation Post Ref. Debit ($) Credit ($) September 12, 2019 Accounts payable/Company AS 12,200 Purchases discounts 366 Cash 11,834 (to record the payment made and receving purchases discount) Table (5) • The accounts payable account is liability and its balance is decreasing. Therefore, accounts payable account is debited. • The purchases discount account is a contra expense account. The account has the normal credit balance and its increasing. Therefore, it is credited. • The cash account is an asset account and its balance is decreasing. Therefore, it is credited. Working Note: The purchases discounts are received by the buyer from the seller. The purchases discounts are received by the buyer for fulfilling the terms of timely payment to seller for purchases. The terms related to paying on timely basis with the company AS were agreed as 3/10, n/30. The terms 3/10, n/30 means the buyer is entitled to receive three percent of purchase discount on the purchases amount. The buyer will be entitled to the discount only if the payment is paid within ten days after provided invoice. Purchases discount = ( ( Purchases amount − Purchases reutrns − Freight charges ) × ( Percentage of Purchases discount 100 ) ) = $ 12 , 200 × 3 100 = $ 366 The amount calculated as purchase discount would be $366

LooseLeaf for College Accounting: A Contemporary Approach

4th Edition

ISBN: 9781259995057

Author: M. David Haddock Jr. Professor, John Ellis Price, Michael Farina

Publisher: McGraw-Hill Education

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Chapter 8 Solutions

LooseLeaf for College Accounting: A Contemporary Approach

Ch. 8 - What is the name of the account used to record...Ch. 8 - What does FOB shipping point mean?Ch. 8 - Prob. 1.3SRQ Ch. 8 - Prob. 1.4SRE Ch. 8 - Prob. 1.5SRE Ch. 8 - Prob. 1.6SRA Ch. 8 - Prob. 2.1SRQ Ch. 8 - Prob. 2.2SRQ Ch. 8 - The total of the schedule of accounts payable...Ch. 8 - In the accounts payable ledger, a suppliers...

Ch. 8 - Prob. 2.5SRE Ch. 8 - Prob. 2.6SRA Ch. 8 - What is the name of the account used to record...Ch. 8 - What type of account is Purchases Returns and...Ch. 8 - Prob. 3CSR Ch. 8 - Prob. 4CSR Ch. 8 - Prob. 5CSR Ch. 8 - Prob. 1DQ Ch. 8 - Prob. 2DQ Ch. 8 - Prob. 3DQ Ch. 8 - Prob. 4DQ Ch. 8 - Prob. 5DQ Ch. 8 - Prob. 6DQ Ch. 8 - What type of accounts are kept in the accounts...Ch. 8 - Prob. 8DQ Ch. 8 - Prob. 9DQ Ch. 8 - Prob. 10DQ Ch. 8 - Prob. 11DQ Ch. 8 - Prob. 12DQ Ch. 8 - Prob. 13DQ Ch. 8 - Why is using the Purchases Returns and Allowances...Ch. 8 - Prob. 15DQ Ch. 8 - Prob. 16DQ Ch. 8 - Prob. 17DQ Ch. 8 - Prob. 18DQ Ch. 8 - Identify the normal balance of the following...Ch. 8 - Prob. 2E Ch. 8 - Prob. 3E Ch. 8 - Record the following transactions of J. Min...Ch. 8 - Record the following transactions of Allen Inc.:Ch. 8 - Bushard Company (buyer) and Schmidt, Inc. (seller)...Ch. 8 - Prob. 7E Ch. 8 - Prob. 8E Ch. 8 - Prob. 9E Ch. 8 - Prob. 10E Ch. 8 - Prob. 11E Ch. 8 - Prob. 12E Ch. 8 - Prob. 13E Ch. 8 - Record the following transactions of Fashion Park...Ch. 8 - On April 1, Moloney Meat Distributors sold...Ch. 8 - Bushard Company (buyer) and Schmidt, Inc. (seller)...Ch. 8 - Annettes Photo Shop is a retail store that sells...Ch. 8 - Prob. 2PA Ch. 8 - Prob. 3PA Ch. 8 - NewTech Medical Devices is a medical devices...Ch. 8 - Prob. 5PA Ch. 8 - Bowden Company (buyer) and Song, Inc. (seller),...Ch. 8 - The following transactions took place at Fine...Ch. 8 - Prob. 1PB Ch. 8 - Taras Card and Novelty Shop is a retail card,...Ch. 8 - Prob. 3PB Ch. 8 - Prob. 4PB Ch. 8 - Prob. 5PB Ch. 8 - Belladonna Company (buyer) and Sachi, Inc....Ch. 8 - The following transactions took place at The...Ch. 8 - William Evans began Evans Distributors, a sporting...Ch. 8 - Prob. 2CTP Ch. 8 - Prob. 1MF Ch. 8 - Prob. 2MF Ch. 8 - Prob. 3MF Ch. 8 - Prob. 4MF Ch. 8 - Prob. 5MF Ch. 8 - Prob. 6MF Ch. 8 - Prob. 1ED

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Prepare the general journal for recording the transactions.

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Prepare the general journal for recording the transactions.

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Chapter 8 Solutions