Understanding the Business Transaction Nov. 7, 2015 Lamont Enterprises purchases
ID: 2543905 • Letter: U
Question
Understanding the Business Transaction Nov. 7, 2015 Lamont Enterprises purchases $12,900 of merchandise from Christopher Co. and receives an invoice with terms 2/10, net 30. Nov. 10, 2015 Lamont Enterprises returns $2,100 of merchandise due to an error in shipment and issues a debit memorandum Nov. 17, 2015 Lamont Enterprises pays the amount due to Christopher Co. from the purchase on Nov. 7 less the returned items on Nov. 10. Recording in the Accounting System ournalize the November purchase transactions for Lamont Enterprises. For compound entries, if an amount box does not require an entry, enter "O" Nov. 7 Nov. 10 Nov. 17 Financial Statement Impact Check My Work signment Score: 0.0% All work saved. Email Instructor Save andExplanation / Answer
1.
On Nov 7: In this case “merchandise supplies” account debit because this is an asset; and accounts payable account is credit since it creates liability for payment.
Ob Nov 10: Return entry should be made by reversing the above journal, since such thing reduces the balance amounts.
On Nov 17: The due amount is (12,900 – 2,100 =) $10,800. This is to be paid after deducting the discount, since the amount is paid within 10 days for availing such discount. Payment amount = {10,800 × (1 – 0.02) =} $10,584.
Journals
Date
Account titles & explanations
P.ref
Debit
Credit
Nov. 7
Merchandise supplies
$12,900
Accounts payable
$12,900
To record purchase on account
Nov 10
Accounts payable
$2,100
Merchandise supplies
$2,100
To record return defective goods
Nov 17
Accounts payable
$10,800
Discount received
$216
Cash
$10,584
To record payment and availing discount
Date
Account titles & explanations
P.ref
Debit
Credit
Nov. 7
Merchandise supplies
$12,900
Accounts payable
$12,900
To record purchase on account
Nov 10
Accounts payable
$2,100
Merchandise supplies
$2,100
To record return defective goods
Nov 17
Accounts payable
$10,800
Discount received
$216
Cash
$10,584
To record payment and availing discount
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