Purchase-related transaction Burr Company purchased merchandise on account from a supplier for $18,000, terms 2/10, n/30....
Purchase-related transaction
Burr Company purchased merchandise on account from a supplier for $18,000, terms 2/10, n/30. Burr Company returned $3,000 of the merchandise before payment was made and received full credit.
a. If Burr Company pays the invoice within the
discount period, what is the amount of cash required for the
payment?
$
b. What account is decreased by Burr Company to
record the return?
Inventory
Homework Answers
Answer a. The amount of cash required for the payment = $14,700
Explanation : Amount of cash required for the payment = ( Value of goods - Value of goods returned ) * (100 - 2 ) %
= ($18,000 - $3,000) * 98 % = $14,700
Answer b. Merchandise Inventory & Accounts Payable
Explanation . Entry to record purchase returned of $3,000 :
| Debit | Credit | |
| Accounts Payable | 3,000 | |
| Merchandise Inventory | 3,000 |
Thus as the result of purchase returned , Burr Company needs to decrease the balance of both Merchandise Inventory A/C & Accounts Payable A/C
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Purchase-related transaction
Burr Company purchased merchandise on account from a supplier
for $18,000, terms 2/10, n/30....
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