Answer:
Tumusiime Stationers
a) Journal Entries on 14/10/2020:
Debit Office Suppliers Sh 60,000
Credit Cash Account Sh 59,400
Credit Purchase Discount Sh 600
To record the payment in full on account.
Office Suppliers
b) Journal Entries on 14/10/2020:
Debit Cash Account Sh 59,400
Debit Sales Discount Sh 600
Credit Tumusiime Stationers Sh 60,000
Explanation:
Other Journal entries made by Tumusiime and Office Suppliers are:
Tumusiime:
October 4, 2020:
Debit Inventory Sh 62,000
Credit Office Suppliers Sh 62,000
To record the purchase of goods on account, terms of 1/10, n/30.
Debit Office Suppliers Sh 2,000
Credit Inventory Sh 2,000
To record the return of goods on account.
Office Suppliers:
October 4, 2020:
Debit Tumusiime Stationers $62,000
Credit Sales Revenue $62,000
To record the sale of goods on account, terms of 1/10, n/30.
Debit Sales Returns $2,000
Credit Tumusiime Stationers $2,000
To record the return of goods on account.
b) Calculations:
To determine the amount of returns, we first calculate the balance before the discount. Since the discount equals 1%, it implies that Sh 59,400 = 99% (100 - 1%). Therefore, 100% of Sh 59,400 = Sh 60,000 (59,400/99%). This shows that Sh 2,000 (Sh 62,000 - 60,000) was the amount of returns made.
