E7.7 (LO 2) (Purchases Recorded Net) Presented below are transactions related to Tom Brokaw, Inc.May 10111924Purchased goods billed at $15,000 subject to cash discount terms of 2/10, n/60.Purchased goods billed at $13,200 subject to terms of 1/15, n/30.Paid invoice of May 10.Purchased goods billed at $11,500 subject to cash discount terms of 2/10, n/30.Instructionsa. Prepare general journal entries for the transactions above under the assumption that purchases are to be recorded at net amounts after cash discounts and that discounts lost are to be treated as financial expense.b. Assuming no purchase or payment transactions other than those given above, prepare the adjusting entry required on May 31 if financial statements are to be prepared as of that date.

Journal entries refer to the concept of noting all the daily transactions of a company in its books in order to regulate the daily activities of a company.1) Preparing the journal entries as follows: Date Particulars Debit ($) Credit ($) 10 May Purchased (15,000 * 98%) $14,700 Accounts payable $14,700 (To record the purchases made on account) 11 May Purchases $13,068 Accounts payable $13,068 (To record the purchases made on account) 19 May Accounts payable $14,700 Cash $14,700 (To record cash payment made for the purchases made on account) 24 May Purchases $11,270 Accounts payable $11,270 (To record the purchases made on account) 2) Preparing the adjusting entry as follows: Date Particulars Debit ($) Credit ($) 31 May Purchased (13,200 * 1%) $132 Accounts payable $132 (To record the cash discount lost on purchases made on account as on 11 May)

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May 10 Purchased goods billed at $15,000 subject to cash discount terms of 2/10, n/60. Purchased goods billed at $13,200 subject to terms of 1/15, n/30. 11 19 Paid invoice of May 10. 24 Purchased goods billed at $11,500 subject to cash discount terms of 2/10, n/30. es for the transactions above under the assumption that purchases are to be recorded at net amounts after cash discounts and that discounts lost are to be treat ment transactions other than those given above, prepare the adjusting entry required on May 31 if financial statements are to be prepared as of that date.

May 10 Purchased goods billed at $15,000 subject to cash discount terms of 2/10, n/60. Purchased goods billed at $13,200 subject to terms of 1/15, n/30. 11 19 Paid invoice of May 10. 24 Purchased goods billed at $11,500 subject to cash discount terms of 2/10, n/30. es for the transactions above under the assumption that purchases are to be recorded at net amounts after cash discounts and that discounts lost are to be treat ment transactions other than those given above, prepare the adjusting entry required on May 31 if financial statements are to be prepared as of that date.

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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