Question

20. The collection of a $500 account beyond the 2 percent discount period would result in a A) credit to Cash for $500. B) debit to Cash for $490. C) debit to Sales Discounts for $10. D) Creditto Accounts Receivable for $500. 21. Goods totaling $5,000 purchased February 2 on terms of 2/10, n/30 and on which returns of $1,000 were made on February 10 would be subject to which of the following discounts if paid for on February 12? A) Nene B) $10 C) $80 D) $20 22. The entry to record a payment on a $1,500 account within the 2 percent discount period would include a A) debit to Accounts Payable for $1,470. B debit'to Cash for $1,500. c) credit to Accounts Payable for $1,500. D) credit to Purchases Discounts for $30. 23. The entry to record a purchase of $6,000 in merchandise, assuming terms of 2/10,n/30 and a periodit inventory system, would include a A) debit to Accounts Payable for $5,880. B) credit to Purchases for $6,000. C) credit to Accounts Payable for $6,000. D) debit to Purchases Discounts for $120. Dene 2

Answer 1

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Answer 20
As the discount period is already passed. So full amount will be received. So cash will be debited by $ 500 and Accounts Receivable will be credited by $ 500.
Option D.
Answer 21
Purchase on 2nd Feb		5,000.00		A
Purchase returns		1,000.00		B
Net payable		4,000.00		C=A-B
Paid on 12th Feb, i.e. within 10 days
Discount rate		2%		D
Discount amount		80.00		E=C*D
Option C.
Answer 22
Amount payable		1,500.00		F
Discount rate		2%		G
Discount amount		30.00		H=F*G
Amount paid		1,470.00		I=F-H
So full journal entry will be were cash will be credited by $ 1,470, discount received will be credited by $ 30 and Accounts Payable will be debited by $ 1,500.
Option D.
Answer 23
Discount received will be booked only when the payments are made and not when merchandise is purchased. Here merchandise is purchased so
So full journal entry will be were Inventory will be debited by $ 6,000 and Accounts Payable will be credited by $ 6,000.
Option C.