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College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570

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BuyFindarrow_forward

College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570
Textbook Problem

Record the following transactions in general journal form for Ford Education Outfitters and Romero Textbooks, Inc.

  1. a. Ford Educational Outfitters bought merchandise on account from Romero Textbooks, Inc., invoice no. 10594, $1,875.34; terms net 30 days; FOB destination. Romero Textbooks, Inc., paid $93.80 for shipping.
  2. b. Ford Education Outfitters received credit memo no. 513A from Romero Textbooks, Inc., for merchandise returned, $135.78.

To determine

Prepare journal entry to record the given transactions in the general journal form for Company F and Company R.

Explanation

General journal:

This is a journal used to record infrequent transactions like adjusting entries, closing entries, accounting errors, sale of assets, or bad debts expense.

Prepare journal entry to record the given transactions in the general journal form for Company F.

Serial Number Account Titles and explanation Debit ($) Credit ($)
a. Purchase 1,875.34  
       Accounts payable, Company R   1,875.34
  (To record the purchase of merchandise from the Company R, invoice no.10594 terms n/30)    
       
b. Accounts payable 135.78  
       Purchase returns and allowance   135.78
  (To record the credit memo no.513A for return of  merchandise)    

Table (1)

(a)

  • Purchase is a component of stockholder’s equity and there is an increase in the value of expense. Hence, debit the purchase with $1,875.34.
  • Accounts payable is a liability and there is an increase in the value of liability. Hence, credit the accounts payable with $1,875.34.

(b)

  • Accounts payable is a liability and there is a decrease in the value of liability. Hence, debit the accounts payable with $135.78
  • Purchase return and allowance is a contra expense and decrease the value of purchase (expense). Hence, credit the purchase return and allowance with $135.78.

Prepare journal entry to record the given transactions in the general journal form for Company R.

Serial Number Account Titles and explanation Debit ($) Credit ($)
a...

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