Solution:
Calculate the amount of accounts payable.
Purchases = $43,250
Discount percentage = 2%
Freight charges = $650
Amount of accounts payable = [(Purchases — Discount) + Freight] = [Purchases — (Purchases x 2%) + Freight]
= [$43,250— ($43, 250 x 2%) + $650] (1)
= $43,250 — $865 + $650
= $43,035
Merchandise Inventory is an asset and it is increased by $43,035. Therefore, the debit Merchandise Inventory account with $43,035.
• Accounts payable is a liability and it is increased by $43,035.
Therefore, credit accounts payable account with $43,035.
Record the journal entry of Company N.
Date Account Title & Explanation Post Ref. Debit ($) Credit ($)
5th Mar Merchandise Inventory 19,175
Accounts payable 19,175
(To record purchase on account)
Table (2)
Merchandise Inventory is an asset and it is increased by $19,175.
Therefore, debit Merchandise Inventory account with $19,175.
• Accounts payable is a liability and it is increased by $19,175.
Therefore, credit accounts payable account with $19,175.
Record the journal entry of Company N.
Date Account Title&Explanation Post Ref. Debit ($) Credit ($)
March 10 Accounts payable 43,035
Cash 43,035
(To record the payment against accounts payable)
Table (3)
• Accounts payable is a liability and it is decreased by $43,035. Therefore, debit accounts payable account with $43,035.
• Cash is an asset and it is decreased by $43,035. Therefore, credit cash account with $43,035.
Record the journal entry of Company N.
Date Account Title&Explanation Post Ref. Debit ($) Credit ($)
March 13 Merchandise Inventory 15,239
Accounts payable 15,239 (2)
(To record purchase on account)
Table (4)
Calculate the amount of accounts payable.
Purchases = $15,550
Discount percentage = 2%
Amount of accounts payable = (Purchases — Discount) = Purchases — (Purchacss x 2%)
= $15,550 - ($15,550 x 2%) (2)
= $15,550 - $311
= $15, 239
Merchandise Inventory is an asset and it is increased by $15,239. Therefore, debit Merchandise Inventory account with 315,239.
• Accounts payable is a liability and it is increased by $15,239.
Therefore, credit accounts payable accounts with $15,239.
Record the journal entry of Company N.
Date Account Title & Explanation Post Ref. Debit ($) Credit ($)
Mar14 Accounts payable 3,675 (3)
Merchandise Inventory 3,675
(To record purchase return)
Table (5)
Calculate the amount of accounts payable.
Purchases return = $3,750
Discount percentage = 2%
Amount of accounts payable = (Purchases return — Discount) =Purchases return — (Purchases return x 2%)
= $3,750 - ($3, 750 x 2%)
= $3,750 - $75
= $3,675 (3)
• Accounts payable is a liability and it is decreased by $3,675.
Therefore, debit accounts payable account with $3,675.
• Merchandise Inventory is an asset and it is decreased by $3,675. Therefore, credit Merchandise Inventory account with $3,675.
Record the journal entry of Company N
