Calculate cash paid to suppliers.

Question

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Answer 1

Question

Chapter 11, Problem 19E

1.

To determine

Calculate cash paid to suppliers.

1.

Expert Solution

Explanation of Solution

Cash outflows: The amount of cash paid by a company for the operating, investing, and financing activities of the business during a certain period is referred to as cash outflow.

Calculate cash paid to suppliers.

Situation	Cost of goods sold	Inventory Increase (Decrease)	Accounts payable Increase (Decrease)	Cash paid to suppliers
1	$150	$25	$20	(1) $155
2	$150	($25)	$20	(2) $105
3	$150	$25	($20)	(3) $195
4	$150	($25)	($20)	(4) $145

Table (1)

Working note:

Calculate amount of cash paid to suppliers for each situation:

Situation 1:

Cash paid to suppliers=(Cost of goods sold+Increase in inventory−Increase in accounts payable)=$150+$25−$20=$155 (1)

Situation 2:

Cash paid to suppliers=(Cost of goods sold−Decrease in inventory−Increase in accounts payable)=$150−$25−$20=$105 (2)

Situation 3:

Cash paid to suppliers=(Cost of goods sold+Increase in inventory+Decrease in accounts payable)=$150+$25+$20=$195 (3)

Situation 4:

Cash paid to suppliers=(Cost of goods sold−Decrease in inventory+Decrease in accounts payable)=$150−$25+$20=$145 (4)

2.

To determine

Prepare the summary journal entry for each situation.

2.

Expert Solution

Explanation of Solution

Prepare the summary journal entry for each situation.

Situation 1:

Date	Accounts title and explanation	Debit ($)	Credit ($)
	Cost of goods sold	150
	Inventory	25
	Accounts payable		20
	Cash		155
	(To record the summary journal entry)

Table (1)

Cost of goods sold is an expense account and it decreases the stockholders’ equity. Hence, debit cost of goods sold with $150.
Inventory is an asset account and it is increased. Hence, debit inventory with $25.
Accounts payable is a liability account and it is increased. Hence, credit accounts payable with $20.
Cash is an asset account and it is decreased. Therefore, credit cash with $155.

Situation 2:

Date	Accounts title and explanation	Debit ($)	Credit ($)
	Cost of goods sold	150
	Inventory		25
	Accounts payable		20
	Cash		105
	(To record the summary journal entry)

Table (2)

Cost of goods sold is an expense account and it decreases the stockholders’ equity. Hence, debit cost of goods sold with $150.
Inventory is an asset account and it is decreased. Hence, credit inventory with $25.
Accounts payable is a liability account and it is decreased. Hence, credit accounts payable with $20.
Cash is an asset account and it is decreased. Therefore, credit cash with $105.

Situation 3:

Date	Accounts title and explanation	Debit ($)	Credit ($)
	Cost of goods sold	150
	Accounts payable	20
	Inventory	25
	Cash		195
	(To record the summary journal entry)

Table (3)

Cost of goods sold is an expense account and it decreases the stockholders’ equity. Hence, debit cost of goods sold with $150.
Inventory is an asset account and it is increased. Hence, debit inventory with $25.
Accounts payable is a liability account and it is decreased. Hence, debit accounts payable with $20.
Cash is an asset account and it is decreased. Therefore, credit cash with $195.

Situation 4:

Date	Accounts title and explanation	Debit ($)	Credit ($)
	Cost of goods sold	150
	Accounts payable	20
	Inventory		25
	Cash		145
	(To record the summary journal entry)

Table (4)

Cost of goods sold is an expense account and it decreases the stockholders’ equity. Hence, debit cost of goods sold with $150.
Accounts payable is a liability account and it is decreased. Hence, debit accounts payable with $20.
Inventory is an asset account and it is decreased. Hence, credit inventory with $25.
Cash is an asset account and it is decreased. Therefore, credit cash with $145.

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Please provide the accurate answer to this financial accounting problem using valid techniques.

What is the cost of goods sold?

Answer 2

Question

Chapter 11, Problem 19E

1.

To determine

Calculate cash paid to suppliers.

1.

Expert Solution

Explanation of Solution

Cash outflows: The amount of cash paid by a company for the operating, investing, and financing activities of the business during a certain period is referred to as cash outflow.

Calculate cash paid to suppliers.

Situation	Cost of goods sold	Inventory Increase (Decrease)	Accounts payable Increase (Decrease)	Cash paid to suppliers
1	$150	$25	$20	(1) $155
2	$150	($25)	$20	(2) $105
3	$150	$25	($20)	(3) $195
4	$150	($25)	($20)	(4) $145

Table (1)

Working note:

Calculate amount of cash paid to suppliers for each situation:

Situation 1:

Cash paid to suppliers=(Cost of goods sold+Increase in inventory−Increase in accounts payable)=$150+$25−$20=$155 (1)

Situation 2:

Cash paid to suppliers=(Cost of goods sold−Decrease in inventory−Increase in accounts payable)=$150−$25−$20=$105 (2)

Situation 3:

Cash paid to suppliers=(Cost of goods sold+Increase in inventory+Decrease in accounts payable)=$150+$25+$20=$195 (3)

Situation 4:

Cash paid to suppliers=(Cost of goods sold−Decrease in inventory+Decrease in accounts payable)=$150−$25+$20=$145 (4)

2.

To determine

Prepare the summary journal entry for each situation.

2.

Expert Solution

Explanation of Solution

Prepare the summary journal entry for each situation.

Situation 1:

Date	Accounts title and explanation	Debit ($)	Credit ($)
	Cost of goods sold	150
	Inventory	25
	Accounts payable		20
	Cash		155
	(To record the summary journal entry)

Table (1)

Cost of goods sold is an expense account and it decreases the stockholders’ equity. Hence, debit cost of goods sold with $150.
Inventory is an asset account and it is increased. Hence, debit inventory with $25.
Accounts payable is a liability account and it is increased. Hence, credit accounts payable with $20.
Cash is an asset account and it is decreased. Therefore, credit cash with $155.

Situation 2:

Date	Accounts title and explanation	Debit ($)	Credit ($)
	Cost of goods sold	150
	Inventory		25
	Accounts payable		20
	Cash		105
	(To record the summary journal entry)

Table (2)

Cost of goods sold is an expense account and it decreases the stockholders’ equity. Hence, debit cost of goods sold with $150.
Inventory is an asset account and it is decreased. Hence, credit inventory with $25.
Accounts payable is a liability account and it is decreased. Hence, credit accounts payable with $20.
Cash is an asset account and it is decreased. Therefore, credit cash with $105.

Situation 3:

Date	Accounts title and explanation	Debit ($)	Credit ($)
	Cost of goods sold	150
	Accounts payable	20
	Inventory	25
	Cash		195
	(To record the summary journal entry)

Table (3)

Cost of goods sold is an expense account and it decreases the stockholders’ equity. Hence, debit cost of goods sold with $150.
Inventory is an asset account and it is increased. Hence, debit inventory with $25.
Accounts payable is a liability account and it is decreased. Hence, debit accounts payable with $20.
Cash is an asset account and it is decreased. Therefore, credit cash with $195.

Situation 4:

Date	Accounts title and explanation	Debit ($)	Credit ($)
	Cost of goods sold	150
	Accounts payable	20
	Inventory		25
	Cash		145
	(To record the summary journal entry)

Table (4)

Cost of goods sold is an expense account and it decreases the stockholders’ equity. Hence, debit cost of goods sold with $150.
Accounts payable is a liability account and it is decreased. Hence, debit accounts payable with $20.
Inventory is an asset account and it is decreased. Hence, credit inventory with $25.
Cash is an asset account and it is decreased. Therefore, credit cash with $145.

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Answer 3

Question

Chapter 11, Problem 19E

1.

To determine

Calculate cash paid to suppliers.

1.

Expert Solution

Explanation of Solution

Cash outflows: The amount of cash paid by a company for the operating, investing, and financing activities of the business during a certain period is referred to as cash outflow.

Calculate cash paid to suppliers.

Situation	Cost of goods sold	Inventory Increase (Decrease)	Accounts payable Increase (Decrease)	Cash paid to suppliers
1	$150	$25	$20	(1) $155
2	$150	($25)	$20	(2) $105
3	$150	$25	($20)	(3) $195
4	$150	($25)	($20)	(4) $145

Table (1)

Working note:

Calculate amount of cash paid to suppliers for each situation:

Situation 1:

Cash paid to suppliers=(Cost of goods sold+Increase in inventory−Increase in accounts payable)=$150+$25−$20=$155 (1)

Situation 2:

Cash paid to suppliers=(Cost of goods sold−Decrease in inventory−Increase in accounts payable)=$150−$25−$20=$105 (2)

Situation 3:

Cash paid to suppliers=(Cost of goods sold+Increase in inventory+Decrease in accounts payable)=$150+$25+$20=$195 (3)

Situation 4:

Cash paid to suppliers=(Cost of goods sold−Decrease in inventory+Decrease in accounts payable)=$150−$25+$20=$145 (4)

2.

To determine

Prepare the summary journal entry for each situation.

2.

Expert Solution

Explanation of Solution

Prepare the summary journal entry for each situation.

Situation 1:

Date	Accounts title and explanation	Debit ($)	Credit ($)
	Cost of goods sold	150
	Inventory	25
	Accounts payable		20
	Cash		155
	(To record the summary journal entry)

Table (1)

Cost of goods sold is an expense account and it decreases the stockholders’ equity. Hence, debit cost of goods sold with $150.
Inventory is an asset account and it is increased. Hence, debit inventory with $25.
Accounts payable is a liability account and it is increased. Hence, credit accounts payable with $20.
Cash is an asset account and it is decreased. Therefore, credit cash with $155.

Situation 2:

Date	Accounts title and explanation	Debit ($)	Credit ($)
	Cost of goods sold	150
	Inventory		25
	Accounts payable		20
	Cash		105
	(To record the summary journal entry)

Table (2)

Cost of goods sold is an expense account and it decreases the stockholders’ equity. Hence, debit cost of goods sold with $150.
Inventory is an asset account and it is decreased. Hence, credit inventory with $25.
Accounts payable is a liability account and it is decreased. Hence, credit accounts payable with $20.
Cash is an asset account and it is decreased. Therefore, credit cash with $105.

Situation 3:

Date	Accounts title and explanation	Debit ($)	Credit ($)
	Cost of goods sold	150
	Accounts payable	20
	Inventory	25
	Cash		195
	(To record the summary journal entry)

Table (3)

Cost of goods sold is an expense account and it decreases the stockholders’ equity. Hence, debit cost of goods sold with $150.
Inventory is an asset account and it is increased. Hence, debit inventory with $25.
Accounts payable is a liability account and it is decreased. Hence, debit accounts payable with $20.
Cash is an asset account and it is decreased. Therefore, credit cash with $195.

Situation 4:

Date	Accounts title and explanation	Debit ($)	Credit ($)
	Cost of goods sold	150
	Accounts payable	20
	Inventory		25
	Cash		145
	(To record the summary journal entry)

Table (4)

Cost of goods sold is an expense account and it decreases the stockholders’ equity. Hence, debit cost of goods sold with $150.
Accounts payable is a liability account and it is decreased. Hence, debit accounts payable with $20.
Inventory is an asset account and it is decreased. Hence, credit inventory with $25.
Cash is an asset account and it is decreased. Therefore, credit cash with $145.

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Answer 4

Question

Chapter 11, Problem 19E

1.

To determine

Calculate cash paid to suppliers.

1.

Expert Solution

Explanation of Solution

Cash outflows: The amount of cash paid by a company for the operating, investing, and financing activities of the business during a certain period is referred to as cash outflow.

Calculate cash paid to suppliers.

Situation	Cost of goods sold	Inventory Increase (Decrease)	Accounts payable Increase (Decrease)	Cash paid to suppliers
1	$150	$25	$20	(1) $155
2	$150	($25)	$20	(2) $105
3	$150	$25	($20)	(3) $195
4	$150	($25)	($20)	(4) $145

Table (1)

Working note:

Calculate amount of cash paid to suppliers for each situation:

Situation 1:

Cash paid to suppliers=(Cost of goods sold+Increase in inventory−Increase in accounts payable)=$150+$25−$20=$155 (1)

Situation 2:

Cash paid to suppliers=(Cost of goods sold−Decrease in inventory−Increase in accounts payable)=$150−$25−$20=$105 (2)

Situation 3:

Cash paid to suppliers=(Cost of goods sold+Increase in inventory+Decrease in accounts payable)=$150+$25+$20=$195 (3)

Situation 4:

Cash paid to suppliers=(Cost of goods sold−Decrease in inventory+Decrease in accounts payable)=$150−$25+$20=$145 (4)

2.

To determine

Prepare the summary journal entry for each situation.

2.

Expert Solution

Explanation of Solution

Prepare the summary journal entry for each situation.

Situation 1:

Date	Accounts title and explanation	Debit ($)	Credit ($)
	Cost of goods sold	150
	Inventory	25
	Accounts payable		20
	Cash		155
	(To record the summary journal entry)

Table (1)

Cost of goods sold is an expense account and it decreases the stockholders’ equity. Hence, debit cost of goods sold with $150.
Inventory is an asset account and it is increased. Hence, debit inventory with $25.
Accounts payable is a liability account and it is increased. Hence, credit accounts payable with $20.
Cash is an asset account and it is decreased. Therefore, credit cash with $155.

Situation 2:

Date	Accounts title and explanation	Debit ($)	Credit ($)
	Cost of goods sold	150
	Inventory		25
	Accounts payable		20
	Cash		105
	(To record the summary journal entry)

Table (2)

Cost of goods sold is an expense account and it decreases the stockholders’ equity. Hence, debit cost of goods sold with $150.
Inventory is an asset account and it is decreased. Hence, credit inventory with $25.
Accounts payable is a liability account and it is decreased. Hence, credit accounts payable with $20.
Cash is an asset account and it is decreased. Therefore, credit cash with $105.

Situation 3:

Date	Accounts title and explanation	Debit ($)	Credit ($)
	Cost of goods sold	150
	Accounts payable	20
	Inventory	25
	Cash		195
	(To record the summary journal entry)

Table (3)

Cost of goods sold is an expense account and it decreases the stockholders’ equity. Hence, debit cost of goods sold with $150.
Inventory is an asset account and it is increased. Hence, debit inventory with $25.
Accounts payable is a liability account and it is decreased. Hence, debit accounts payable with $20.
Cash is an asset account and it is decreased. Therefore, credit cash with $195.

Situation 4:

Date	Accounts title and explanation	Debit ($)	Credit ($)
	Cost of goods sold	150
	Accounts payable	20
	Inventory		25
	Cash		145
	(To record the summary journal entry)

Table (4)

Cost of goods sold is an expense account and it decreases the stockholders’ equity. Hence, debit cost of goods sold with $150.
Accounts payable is a liability account and it is decreased. Hence, debit accounts payable with $20.
Inventory is an asset account and it is decreased. Hence, credit inventory with $25.
Cash is an asset account and it is decreased. Therefore, credit cash with $145.

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Answer 5

Chapter 11, Problem 19E

1.

To determine

Calculate cash paid to suppliers.

1.

Expert Solution

Explanation of Solution

Cash outflows: The amount of cash paid by a company for the operating, investing, and financing activities of the business during a certain period is referred to as cash outflow.

Calculate cash paid to suppliers.

Situation	Cost of goods sold	Inventory Increase (Decrease)	Accounts payable Increase (Decrease)	Cash paid to suppliers
1	$150	$25	$20	(1) $155
2	$150	($25)	$20	(2) $105
3	$150	$25	($20)	(3) $195
4	$150	($25)	($20)	(4) $145

Table (1)

Working note:

Calculate amount of cash paid to suppliers for each situation:

Situation 1:

Cash paid to suppliers=(Cost of goods sold+Increase in inventory−Increase in accounts payable)=$150+$25−$20=$155 (1)

Situation 2:

Cash paid to suppliers=(Cost of goods sold−Decrease in inventory−Increase in accounts payable)=$150−$25−$20=$105 (2)

Situation 3:

Cash paid to suppliers=(Cost of goods sold+Increase in inventory+Decrease in accounts payable)=$150+$25+$20=$195 (3)

Situation 4:

Cash paid to suppliers=(Cost of goods sold−Decrease in inventory+Decrease in accounts payable)=$150−$25+$20=$145 (4)

2.

To determine

Prepare the summary journal entry for each situation.

2.

Expert Solution

Explanation of Solution

Prepare the summary journal entry for each situation.

Situation 1:

Date	Accounts title and explanation	Debit ($)	Credit ($)
	Cost of goods sold	150
	Inventory	25
	Accounts payable		20
	Cash		155
	(To record the summary journal entry)

Table (1)

Cost of goods sold is an expense account and it decreases the stockholders’ equity. Hence, debit cost of goods sold with $150.
Inventory is an asset account and it is increased. Hence, debit inventory with $25.
Accounts payable is a liability account and it is increased. Hence, credit accounts payable with $20.
Cash is an asset account and it is decreased. Therefore, credit cash with $155.

Situation 2:

Date	Accounts title and explanation	Debit ($)	Credit ($)
	Cost of goods sold	150
	Inventory		25
	Accounts payable		20
	Cash		105
	(To record the summary journal entry)

Table (2)

Cost of goods sold is an expense account and it decreases the stockholders’ equity. Hence, debit cost of goods sold with $150.
Inventory is an asset account and it is decreased. Hence, credit inventory with $25.
Accounts payable is a liability account and it is decreased. Hence, credit accounts payable with $20.
Cash is an asset account and it is decreased. Therefore, credit cash with $105.

Situation 3:

Date	Accounts title and explanation	Debit ($)	Credit ($)
	Cost of goods sold	150
	Accounts payable	20
	Inventory	25
	Cash		195
	(To record the summary journal entry)

Table (3)

Cost of goods sold is an expense account and it decreases the stockholders’ equity. Hence, debit cost of goods sold with $150.
Inventory is an asset account and it is increased. Hence, debit inventory with $25.
Accounts payable is a liability account and it is decreased. Hence, debit accounts payable with $20.
Cash is an asset account and it is decreased. Therefore, credit cash with $195.

Situation 4:

Date	Accounts title and explanation	Debit ($)	Credit ($)
	Cost of goods sold	150
	Accounts payable	20
	Inventory		25
	Cash		145
	(To record the summary journal entry)

Table (4)

Cost of goods sold is an expense account and it decreases the stockholders’ equity. Hence, debit cost of goods sold with $150.
Accounts payable is a liability account and it is decreased. Hence, debit accounts payable with $20.
Inventory is an asset account and it is decreased. Hence, credit inventory with $25.
Cash is an asset account and it is decreased. Therefore, credit cash with $145.

Answer 6

Chapter 11, Problem 19E

1.

To determine

Calculate cash paid to suppliers.

1.

Expert Solution

Explanation of Solution

Cash outflows: The amount of cash paid by a company for the operating, investing, and financing activities of the business during a certain period is referred to as cash outflow.

Calculate cash paid to suppliers.

Situation	Cost of goods sold	Inventory Increase (Decrease)	Accounts payable Increase (Decrease)	Cash paid to suppliers
1	$150	$25	$20	(1) $155
2	$150	($25)	$20	(2) $105
3	$150	$25	($20)	(3) $195
4	$150	($25)	($20)	(4) $145

Table (1)

Working note:

Calculate amount of cash paid to suppliers for each situation:

Situation 1:

Cash paid to suppliers=(Cost of goods sold+Increase in inventory−Increase in accounts payable)=$150+$25−$20=$155 (1)

Situation 2:

Cash paid to suppliers=(Cost of goods sold−Decrease in inventory−Increase in accounts payable)=$150−$25−$20=$105 (2)

Situation 3:

Cash paid to suppliers=(Cost of goods sold+Increase in inventory+Decrease in accounts payable)=$150+$25+$20=$195 (3)

Situation 4:

Cash paid to suppliers=(Cost of goods sold−Decrease in inventory+Decrease in accounts payable)=$150−$25+$20=$145 (4)

Answer 7

Chapter 11, Problem 19E

1.

To determine

Calculate cash paid to suppliers.

Answer 8

1.

Expert Solution

Explanation of Solution

Cash outflows: The amount of cash paid by a company for the operating, investing, and financing activities of the business during a certain period is referred to as cash outflow.

Calculate cash paid to suppliers.

Situation	Cost of goods sold	Inventory Increase (Decrease)	Accounts payable Increase (Decrease)	Cash paid to suppliers
1	$150	$25	$20	(1) $155
2	$150	($25)	$20	(2) $105
3	$150	$25	($20)	(3) $195
4	$150	($25)	($20)	(4) $145

Table (1)

Working note:

Calculate amount of cash paid to suppliers for each situation:

Situation 1:

Cash paid to suppliers=(Cost of goods sold+Increase in inventory−Increase in accounts payable)=$150+$25−$20=$155 (1)

Situation 2:

Cash paid to suppliers=(Cost of goods sold−Decrease in inventory−Increase in accounts payable)=$150−$25−$20=$105 (2)

Situation 3:

Cash paid to suppliers=(Cost of goods sold+Increase in inventory+Decrease in accounts payable)=$150+$25+$20=$195 (3)

Situation 4:

Cash paid to suppliers=(Cost of goods sold−Decrease in inventory+Decrease in accounts payable)=$150−$25+$20=$145 (4)

Answer 9

1.

Expert Solution

Answer 10

1.

Expert Solution

Answer 11

Expert Solution

Answer 12

2.

To determine

Prepare the summary journal entry for each situation.

2.

Expert Solution

Explanation of Solution

Prepare the summary journal entry for each situation.

Situation 1:

Date	Accounts title and explanation	Debit ($)	Credit ($)
	Cost of goods sold	150
	Inventory	25
	Accounts payable		20
	Cash		155
	(To record the summary journal entry)

Table (1)

Cost of goods sold is an expense account and it decreases the stockholders’ equity. Hence, debit cost of goods sold with $150.
Inventory is an asset account and it is increased. Hence, debit inventory with $25.
Accounts payable is a liability account and it is increased. Hence, credit accounts payable with $20.
Cash is an asset account and it is decreased. Therefore, credit cash with $155.

Situation 2:

Date	Accounts title and explanation	Debit ($)	Credit ($)
	Cost of goods sold	150
	Inventory		25
	Accounts payable		20
	Cash		105
	(To record the summary journal entry)

Table (2)

Cost of goods sold is an expense account and it decreases the stockholders’ equity. Hence, debit cost of goods sold with $150.
Inventory is an asset account and it is decreased. Hence, credit inventory with $25.
Accounts payable is a liability account and it is decreased. Hence, credit accounts payable with $20.
Cash is an asset account and it is decreased. Therefore, credit cash with $105.

Situation 3:

Date	Accounts title and explanation	Debit ($)	Credit ($)
	Cost of goods sold	150
	Accounts payable	20
	Inventory	25
	Cash		195
	(To record the summary journal entry)

Table (3)

Cost of goods sold is an expense account and it decreases the stockholders’ equity. Hence, debit cost of goods sold with $150.
Inventory is an asset account and it is increased. Hence, debit inventory with $25.
Accounts payable is a liability account and it is decreased. Hence, debit accounts payable with $20.
Cash is an asset account and it is decreased. Therefore, credit cash with $195.

Situation 4:

Date	Accounts title and explanation	Debit ($)	Credit ($)
	Cost of goods sold	150
	Accounts payable	20
	Inventory		25
	Cash		145
	(To record the summary journal entry)

Table (4)

Cost of goods sold is an expense account and it decreases the stockholders’ equity. Hence, debit cost of goods sold with $150.
Accounts payable is a liability account and it is decreased. Hence, debit accounts payable with $20.
Inventory is an asset account and it is decreased. Hence, credit inventory with $25.
Cash is an asset account and it is decreased. Therefore, credit cash with $145.

Answer 13

2.

To determine

Prepare the summary journal entry for each situation.

Answer 14

2.

Expert Solution

Explanation of Solution

Prepare the summary journal entry for each situation.

Situation 1:

Date	Accounts title and explanation	Debit ($)	Credit ($)
	Cost of goods sold	150
	Inventory	25
	Accounts payable		20
	Cash		155
	(To record the summary journal entry)

Table (1)

Cost of goods sold is an expense account and it decreases the stockholders’ equity. Hence, debit cost of goods sold with $150.
Inventory is an asset account and it is increased. Hence, debit inventory with $25.
Accounts payable is a liability account and it is increased. Hence, credit accounts payable with $20.
Cash is an asset account and it is decreased. Therefore, credit cash with $155.

Situation 2:

Date	Accounts title and explanation	Debit ($)	Credit ($)
	Cost of goods sold	150
	Inventory		25
	Accounts payable		20
	Cash		105
	(To record the summary journal entry)

Table (2)

Cost of goods sold is an expense account and it decreases the stockholders’ equity. Hence, debit cost of goods sold with $150.
Inventory is an asset account and it is decreased. Hence, credit inventory with $25.
Accounts payable is a liability account and it is decreased. Hence, credit accounts payable with $20.
Cash is an asset account and it is decreased. Therefore, credit cash with $105.

Situation 3:

Date	Accounts title and explanation	Debit ($)	Credit ($)
	Cost of goods sold	150
	Accounts payable	20
	Inventory	25
	Cash		195
	(To record the summary journal entry)

Table (3)

Cost of goods sold is an expense account and it decreases the stockholders’ equity. Hence, debit cost of goods sold with $150.
Inventory is an asset account and it is increased. Hence, debit inventory with $25.
Accounts payable is a liability account and it is decreased. Hence, debit accounts payable with $20.
Cash is an asset account and it is decreased. Therefore, credit cash with $195.

Situation 4:

Date	Accounts title and explanation	Debit ($)	Credit ($)
	Cost of goods sold	150
	Accounts payable	20
	Inventory		25
	Cash		145
	(To record the summary journal entry)

Table (4)

Cost of goods sold is an expense account and it decreases the stockholders’ equity. Hence, debit cost of goods sold with $150.
Accounts payable is a liability account and it is decreased. Hence, debit accounts payable with $20.
Inventory is an asset account and it is decreased. Hence, credit inventory with $25.
Cash is an asset account and it is decreased. Therefore, credit cash with $145.