Marsh Pharmacy uses the following journals: sales journal, purchases journal, ca
ID: 2463801 • Letter: M
Question
Marsh Pharmacy uses the following journals: sales journal, purchases journal, cash receipts journal, cash disbursements journal, and general journal. The following two transactions were processed. On June 5, Marsh Pharmacy purchased merchandise priced at $14,000, subject to credit terms of 2/10, n/30. On June 14, Marsh Pharmacy paid the net amount due for the merchandise purchased on June 5. In journalizing the June 14 payment, the pharmacy debited Accounts Payable for $14,000 but failed to record the cash discount on the purchase.Cash was properly credited for the actual $133, 720 paid. a. In what Journals would the June 5 and the June 14 transactions be recorded? b. What procedure is likely to discover the error in journalizing the June 14 transaction?
Explanation / Answer
a & b.
Prepare the journal entries:
Date
Account title & explanation
Debit
Credit
June 5
Purchase
$ 14,000
Accounts payable
$ 14,000
Date
Account title & explanation
Debit
Credit
June 14
Account payable
$ 14,000
Discount received ($14,000 *2%)
$ 280
Cash
$ 13,720
Marsh Pharmacy could not journalize cash discount received. The above entry passed to record the discount received.
Date
Account title & explanation
Debit
Credit
June 5
Purchase
$ 14,000
Accounts payable
$ 14,000
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.