a) | |
Total purchase value of merchandise | $25,200 |
Less: Cost of merchandise returned | ($2,400) |
Amount to be payable | $22,800 |
Less: Discount value for paying withing the discount period ($22,800*2/100) | ($456) |
Amount that Home Furnishings must pay on April 15 | $22,344 |
b) | ||||||||||||||||
Assets | = | Liab. | + | Equity | Rev. | - | Exp. | = | Net Inc. | Cash Flow | ||||||
Cash | + | Inv. | = | Accts. Pay. | C. Stock | + | Ret. Earn. | |||||||||
+. $25,200 | +. $25,200 | |||||||||||||||
-. $2,400 | -. $2,400 | |||||||||||||||
-. $456 | +. $456 | +. $456 | ||||||||||||||
-. $22,344 | -. $22,344 | -. $22,344 |
c) | |
Total purchase value of merchandise | $25,200 |
Less: Cost of merchandise returned | ($2,400) |
Amount to be payable | $22,800 |
$22,800 should be paid by Home Furnishings, if the payment is not made until April 20, 2018 because discount period ends on April 15 for 2% discount. If any payment is made after April, discount is not applicable, thus, full payment needs to be paid. |
d) | ||||||||||||||||
Assets | = | Liab. | + | Equity | Rev. | - | Exp. | = | Net Inc. | Cash Flow | ||||||
Cash | + | Inv. | = | Accts. Pay. | C. Stock | + | Ret. Earn. | |||||||||
-. $22,800 | -. $22,800 | -. $22,800 |
e) The terms 2/10 means that if the payment is made within 10 days from the date of April 6th then 2% discount is allowed but if the payment is made after April 15 which is 10 days from April 6th, then discount is not allowed. In order to avail the 2% discount, Home Furnishings wanted to pay on April 15. |
Cash Discounts and Purchase Returns On April 6, 2018, Home Furnishings purchased $25,200 of merchandise from...
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