Question

May 10 Purchased goods billed at $17,900 subject to cash discount terms of 2/10, n/60. 11 Purchased goods billed at $10,400 subject to terms of 1/15, n/30. 19 Paid invoice of May 10. 24 Purchased goods billed at $14,200 subject to cash discount terms of 2/10, n/30. Prepare general journal entries for the transactions above under the assumption that purchases are to be recorded at net amounts after cash discounts and that discounts lost are to be treated as financial expense. (If no entry is required, select "No entry" for the account titles and enter for the amounts. Round answers to O decimal places, e.g. 6,578. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Assuming no purchase or payment transactions other than those given above, prepare the adjusting entry required on May 31 if financial statements are to be prepared as of that date. (If no entry is required, select "No entry" for the account titles and enter for the amounts. Round answers to 0 decimal places, e.g. 6,578. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Debit Credit Date Account Titles and Explanation May 31

Answer 1

Journal Entries:

Date	Account title and Explanation	Debit	Credit
May 10	Inventory [17,900 x 0.98]	$17,542
	Accounts payable		$17,542
	[To record purchase of inventory on account]
May 11	Inventory [10,400 x 0.99]	$10,296
	Accounts payable		$10,296
	[To record purchase of inventory on account]
May 19	Accounts payable	$17,542
	Cash		$17,542
	[To record cash paid for accounts payable]
May 24	Inventory [14,200 x 0.98]	$13,916
	Accounts payable		$13,916
	[To record purchase of inventory on account]

Adjusting Entry:

Date	Account title and Explanation	Debit	Credit
May 31	Finance charge [10,400 x 0.01]	$104
	Accounts payable		$104
	[To recod purchase discount lost]