1. purchase of merchandise inventory 2. Return of merchandise inventory 3. Payme

Question

1. purchase of merchandise inventory 2. Return of merchandise inventory 3. Payment for the inventory

290 PE 6-2B Purchases transactions OBJ. 2 Hoffman Company purchased merchandise on account from a supplier for $65,000, terms 1/10, n/30. Hoffman Company returned $7,500 of the merchandise and received full credit. a. If Hoffman Company pays the invoice within the discount period, what is the amount of cash required for the payment? b. What account is debited by Hoffman Company to record the return?

Explanation / Answer

Journal entry :

a) Cash required for payment is $56925

b) Account payable account is debited by Hoffman company to record the return

Date accounts & explanation debit credit Merchandise inventory 65000      Account payable 65000 Account payable 7500      Merchandise inventory 7500 Account payable 57500      Cash 56925      Merchandise inventory 575

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