Question

Purchase-Related Transactions Milan Co., a women's clothing store, purchased $120,000 of merchandise from a supplier on account, terms FOB destination, 2/10, n/30. Milan Co. returned $16,000 of the merchandise, receiving a credit memorandum, and then paid the amount due within the discount period. Illustrate the effects on the accounts and financial statements of Milan Co. to record the following transactions. If no account or activity is affected, select "No effect" from the dropdown and leave the corresponding number entry box blank. Enter account decreases and cash outflows as negative amounts.

b. The merchandise return Balance Sheet Statement of Cash Flows Assets Liabilities Stockholders' Equity Income Statement No Effect + Inventory = Accounts Payable + No Effect 0 Statement of Cash Flows Income Statement No effect 0 No effect No effect o ✓ No effect o

Answer 1

Answer
Answer b:
Merchandise return
	Assets +	Inventory=	Accounts +	Stockholder	Income
CFS			Payable	Equity	Statement
		-$     15,680	-$     15,680
Statement of CFS					Income Statement
No effect					No effect
***	16000-(16000*2%)