Question

The following selected transaction were completed by gourmet company during January of the current year:

Answer 1

Answer:

January 1.

Merchandise $65,000 (debit)

Accounts Payable -  ALMIS Co.  $65,000 (credit)

January 2.

Merchandise $65,000 (debit)

Freight Charges Paid in Advance $650 (debit)

Accounts Payable -  AlFA. Co.  $65,000 (credit)

Cash $650 (credit)

January 3.

Merchandise $91,000 (debit)

Accounts Payable -  fogel Co.  $91,000 (credit)

January 4.

Accounts Payable -  fogel Co.  $7,000 (debit)

Merchandise $7,000 (credit)

January 5.

Accounts Payable -  AlFA. Co.  $65,000 (credit)

Discount Received $1,300 (credit)

Cash $63,700 (credit)

January 6.

Accounts Payable -  fogel Co.  $84,000 (credit)

Discount Received $1,600 (credit)

Cash $82,400 (credit)

January 7.

Merchandise $82,900 (debit)

Freight $750 (debit)

Accounts Payable -  u I trust Co.  $82,900 (credit)

Accounts Payable - Carrier Service Provider $750 (credit)

January 19

Accounts Payable - Carrier Service Provider $750 (debit)

Cash $750 (credit)

January 9

Merchandise $10,000 (debit)

Accounts Payable -  Lenn Co.  $10,000 (credit)

January 10

Accounts Payable -  Lenn Co.  $10,000 (credit)

Discount Received $100 (credit)

Cash $9,900 (credit)

January 31

Accounts Payable -  u I trust Co.  $82,900 (debit)

Cash $82,900 (credit)

Explanation:

When Merchandise is Purchased on Account, Recognize the Assets of Merchandise and Recognize the Liability owing to the Supplier.

When Merchandise is finally paid for, De-recognize the Liability owing to the supplier (less discount applicable) and also De-recognize the Assets of Cash.