Answered: Brett Co. paid $220 to Paul Co. and…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Brett Co. paid $220 to Paul Co. and received a $10 purchases discount. Journalize the entry.

Journalize the entry for Brett Co. Assume the perpetual inventory system. (The amount paid of $220 is the net amount due after applying the discount. Record debits first, then credits. Exclude explanations from journal entries.)

**Journalizing a Purchase Discount Transaction**

**Scenario:**

Brett Co. paid $220 to Paul Co. and received a $10 purchase discount. Journalize the entry.

**Instructions:**
Journalize the entry for Brett Co. Assume the perpetual inventory system is being used. (Note: The amount paid of $220 is the net amount due *after* applying the discount. Record debits first, then credits. Exclude explanations from journal entries.)

**Journal Entry:**

| Date | Accounts | PR | Dr. | Cr. |
|------|---------------------|----|-----|-----|
| | | | | |
| | | | | |

**Explanation:**
The table provided is a template for a journal entry, with columns for the date, accounts affected, posting reference (PR), and the debit (Dr.) and credit (Cr.) entries. Fill in the table with appropriate account names and amounts based on the transaction.

Since the payment is $220 after a $10 discount, the original amount was $230. Record the transaction with a debit to accounts that represent the payment and a credit to accounts payable.

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