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30 October, 04:59

Journalize entries for the following related transactions of Lilly Heating & Air Company. Refer to the Chart of Accounts for exact wording of account titles. A. Purchased $48,400 of merchandise from Schell Co. on account, terms 1/10, n/30. B. Paid the amount owed on the invoice within the discount period. C. Discovered that $7,800 of the merchandise purchased in (A) was defective and returned items, receiving credit. D. Purchased $6,000 of merchandise from Schell Co. on account, terms n/30. E. Received a refund from Schell Co. for return in (C) less the purchase in (D).

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  1. 30 October, 05:26
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    The journal entries are shown below:

    (A) Inventory A/c Dr $47,916

    To Accounts payable A/c $47,916

    (Being purchase made on credit basis is recorded)

    The computation of the inventory is shown below:

    = Purchase amount - purchase amount * discount rate

    = $48,400 - $48,400 * 1%

    = $48,400 - $484

    = $47,916

    (B) Accounts payable A/c $47,916

    To Cash A/c $47,916

    (Being amount paid recorded)

    (C) Inventory A/c Dr $7,722

    To Accounts payable A/c $7,722

    (Being return inventory is recorded)

    The computation of the inventory is shown below:

    = Purchase amount - purchase amount * discount rate

    = $7,800 - $7,800 * 1%

    = $7,800 - $78

    = $7,722

    (D) inventory A/c Dr $6,000

    To Accounts payable A/c $6,000

    (Being purchase made on credit basis is recorded)

    (E) Cash A/c Dr $1,722 ($7,722 - $6,000)

    To Accounts payable A/c $1,722

    (Being received refund amount recorded)
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