Purchase-Related Transactions Showcase Co., a furniture wholesaler, sells mercha

Question

Purchase-Related Transactions Showcase Co., a furniture wholesaler, sells merchandise to Balboa Co. on account, $254,500, terms n/30. The cost of the merchandise sold is $152,700. Showcase Co. issues a credit memo for $30,000 for merchandise returned prior to Balboa Co. paying the original invoice. The cost of the merchandise returned is $17,500. a. Journalize Balboa Co.'s entry for the purchase. Merchandise Inventory Accounts Payable-Showcase Co. Feedback b. Journalize Balboa Co.'s entry for the return of the merchandise for credit. Accounts Payable-Showcase Co. Merchandise Inventory Feedback c. Journalize Balboa Co.'s entry for the payment of the invoice. Accounts Payable-Showcase Co. Cash

Explanation / Answer

Answer:- Journal entry on Purchase (Purchse entry)Balboa Co.:-

Debit Merchandise Inventory $254500, Credit Accounts Payable-Showcase co. $254500.

Journal entry on Merchandise return entry:-

Debit Accounts Payable-Showcase co. $30000, Credit Merchandise Inventory $30000.

Journal entry on (Payment invoice entry):-

Debit Accounts Payable -Showcase co. $224500, Credit Cash $224500.

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