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 $32,000 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 $6,400 before purchases discount of the merchandise was defective and returned items, receiving credit d. Purchased $4,800 of merchandise from Schell Co. on account, terms n/30 e. Received a check for the balance owed from the return in (e), after deducting for the purchase in (d). a. b. c. d.

Explanation / Answer

Journal Entries Working S.No. Account Name Debit Credit Schell & Co. 1 Purchase a/c                                         Dr 32000                    To Schell Co. 32000 ( Being good purchsed from schell Co., terms 2/10, n/30) To Purchase Discount 640 By Purchase a/c 32000 To Cash/Bank 31360 BY Purchase Discount 128 To Purchase Return 6400 BY Purchase a/c 4800 2 Schell Co. 32000 BY Cash/ Bank 1472                       To Purchase Discount 640                        To Cash/Bank 31360 Total 38400 Total 38400 (Being amount paid and discount availed as per terms 2/10) 3 Schell Co 6272 Purchase Discount 128                         To Purchase Return A/c 6400 (Being Defective good has been returned before availing discount, hence discount has been also reversed) 4 Purchase a/c                                         Dr 4800                    To Schell Co. 4800 ( Being good purchsed from schell Co., terms n/30) 5 Cash/ Bank A/c                                      Dr 1472                      To Schell Co. 1472 ( Being balance amt has been received after adjusting second purchase, working is provided)

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