Question

On March 3, Cobra Inc. purchased a desk for $300 on account. On March 22, Cobra purchased another desk for $390 also on account, and then on March 24, Cobra paid $520 on account. At the end of March, what amount should Cobra report for desks (assuming these two desks were the only desks they had)?

Answer 1

Answer:

$690

Explanation:

When the desk (assets) were purchased on account, the entries required are;

Debit Desk account and credit accounts payable.

When payment is made, debit the accounts payable account and credit bank.

As such, the payment of cash does not not affect the amount accounted for as cost of desk.

Hence cost of desk reported

= $300 + $390

= $690