Purchase-Related Transactions Journalize entries for the following related trans

Question

Purchase-Related Transactions Journalize entries for the following related transactions of Lilly Heating & Air Company: a. Purchased $26,000 of merchandise from Schell Co. on account, terms 2/10, n/30. b. Paid the amount owed on the invoice within the discount period. c. Discovered that $5,200 before purchases discount of the merchandise was defective and returned items, receiving credit. d. Purchased $3,800 of merchandise from Schell Co. on account, terms n/30. e. Received a check for the balance owed from the return in (c), after deducting for the purchase in (d). a. b. C. d. e.

Explanation / Answer

Journal entries of Purchases: Date Accounts title and explanations Debit $ Credit $ a. Merchandise Inventory Dr. 26000     Accounts payable 26000 b. Accounts payable Dr. 26000      Cash account (26000*98%) 25480       Merchandise Inventory (26000*2%) 520 c. Accounts payable Dr. (5200*98%) 5096      Merchandise Inventory Account 5096 d. Merchandise Inventory Dr. 3800       Accounts payable 3800 e. Cash account Dr. 1296       Accounts payable 1296

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