Question

Partial balance sheets and additional information are listed below for Monaco Company. Monaco Company Partial Balance Sheets as of December 31 2018 2017 Assets Cash $ 43,000 $ 21,500 Accounts receivable 63,000 93,000 Inventory 26,500 43,000 Liabilities Accounts payable $ 61,500 $ 75,000 Additional information for 2018: Net income was $273,000. Depreciation expense was $33,000. Sales totaled $830,000. Cost of goods sold totaled $308,000. Required: Prepare the summary entry for the amount of cash paid to merchandise suppliers during 2018. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

Answer:

Net Purchases = Cost of goods sold - Decrease in Inventory

                        = $308,000 - $16,500

                        = $291,500

Cash paid to Suppliers = Net Purchases + Decrease in accounts Payable

                                      = $291,500 + $13,500

                                      = $305,000

The summary entry is as follows:

Merchandise Inventory A/c Dr. $291,500

Accounts payable A/c          Dr. $13,500

To cash                                                              $305,000

(To record the amount of cash paid to merchandise suppliers during 2018)