Question

Purchase-Related Transactions Illustrate the effects on the accounts and financial statements of the following related transactions of Bowen Inc. If no account or activity is affected, select "No effect" from the dropdown list and leave the corresponding number entry box blank. Enter account decreases and cash outflows as negative amounts a. Purchased $400,000 of merchandise from Swanson Co. on account, terms 1/10, n/30. Balance Sheet Statement of Income Assets Liabilities + Stockholders' Equity Cash Flows Statement No Effect + Inventory Accounts Payable No Effect Statement of Cash Flows Income Statement Investing b. Paid the amount owed on the invoice within the discount period. Balance Sheet Statement of Income Assets Liabilities Stockholders' Equity Cash Flows Statement Cash + No Effect Accounts Payable No Effect Statement of Cash Flows Income Statement Operating c. Discovered that $60,000 of the merchandise was defective and returned items, receiving credit. Balance Sheet Statement of Income Assets Liabilities +Stockholders' Equity Cash Flows Statement No Effect + Inventory Accounts Payable No Effect Statement of Cash Flows Income Statement Investing d. Purchased $35,000 of merchandise from Swanson Co. on account, terms 1/10, n/30. Balance Sheet Statement of Assets Liabilities +Stockholders' Equity ers' Equity Income Cash Flows Statement No Effect + Inventory Accounts Payable No Effect Statement of Cash Flows Income Statement Investing e. Received a check from Swanson Co. for the balance owed from the return in (c), after deducting for the purchase in (d). Balance Sheet Statement of Assets Liabilities +Stockholders' Equity Cash Flows Statement Cash + No Effect Accounts Payable No Effect Statement of Cash Flows Income Statement Operating

Answer 1

G H Dalance sheet Statement t of Cash labilities No Effectt InventoryPayable No Effect 400,000 Statement of cash flows No Effect No Effect No Effect 12 The credit term 1/10, net 30 means there will be discount of 1% if the amount is paid within 10 days otherwise full amount is payable by 30th day 15 Accounts Payable 00,000 Discount % 1% Purchase Discount $4,000.00 Cash Paid $396,000.00 9alance sheet Statement t of Cash Flows Liabilities +Discount No Effect ($396,co0 $400,000 Statement of cash 27 $39%,000 No Effect No Effoct No Effoct Purchase retum Balance sheet t of Cash Assets Liabllities andAccounts No Effectallawances No Effect Statemont of cash No Effoct No Efforct No Effort Balance sheet t of Cash Assets labilities No Effectt InventoryPayable No Effect 535,000 535,000 19 Statement of cash flows No Effect No Effect No Effect Income Statement 56 Dalance sheet tatement of Cash Stockholder's Assets Liabilities Accounts Cash No Effect No Effect 25,000 25,000 Income Statenent of cash lows 25,000 No Effect No Effect No Effect 63