Question

Presented below are transactions related to Coronado, Inc. May 10 Purchased goods billed at $16,400 subject to cash discount terms of 2/10, n/60. 11 Purchased goods billed at $15,500 subject to terms of 1/15, n/30. 19 Paid invoice of May 10. 24 Purchased goods billed at $10,600 subject to cash discount terms of 2/10, n/30. Collapse question part (a) 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.

Answer 1

Answer and Explanation:

The journal entries are shown below:

On May 10

Purchases ($16,400 × 98%) $16,072  

     To Accounts Payable  $16,072

(Being the purchase of goods is recorded)

On May 11

Purchases ($15,500 × 99 %) $15,345  

     To Accounts Payable  $15,345

(Being the purchase of goods is recorded)

On May 19

Accounts Payable $16,072  

  To Cash  $16,072

(Being the payment of cash is recorded)

On May 24

Purchases ($10,600 × 98%) 10,388  

      To Accounts Payable  10,388

(Being the purchase of goods is recorded)