Explanation Journal entry : Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically. Debit and credit rules: Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts. Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts. Journalize the transactions related to cash payments . Transaction on April 5: Date Account Titles and Explanations Post. Ref. Debit ($) Credit ($) April 5 Accounts Payable, S Industries 8,000 Cash 7,840 Purchases Discounts 160 (Record cash paid for purchases on account) Table (1) Description: Accounts Payable, S Industries is a liability account. Since the payable decreased, the liability decreased, and a decrease in liability is debited. Cash is an asset account. Since cash is paid, asset account decreased, and a decrease in asset is credited. Purchases Discounts is a contra-purchases or contra-costs account, and contra-purchases accounts increase the equity value, and an increase in equity is credited. Working Note 1: Compute purchases discount value. Purchases discounts = { ( Purchases–Purchase returns and allowances ) × Discount percentage } = ( $8,000–$0 ) ×2% = $160 Working Note 2: Compute amount of cash paid (Refer to Working Note 1 for purchase discount value). Cash paid = ( Purchases on account value– Purchases returns and allowances– Purchases discount value ) = $8,000–$0–$160 = $7,840 Transaction on April 19: Date Account Titles and Explanations Post. Ref. Debit ($) Credit ($) April 19 Accounts Payable, Company F 5,000 Cash 4,950 Purchases Discounts 50 (Record cash paid for purchases on account) Table (2) Description: Accounts Payable, Company F is a liability account. Since the payable decreased, the liability decreased, and a decrease in liability is debited. Cash is an asset account. Since cash is paid, asset account decreased, and a decrease in asset is credited. Purchases Discounts is a contra-purchases or contra-costs account, and contra-purchases accounts increase the equity value, and an increase in equity is credited. Working Note 3: Compute purchases discount value. Purchases discounts = { ( Purchases–Purchase returns and allowances ) × Discount percentage } = ( $5,300–$300 ) ×1% = $50 Working Note 4: Compute amount of cash paid (Refer to Working Note 3 for purchase discount value)

College Accounting - Study Guide / Working Papers 1-15

23rd Edition

ISBN: 9781337913560

Author: HEINTZ

Publisher: CENGAGE L

See similar textbooks

Question

Chapter 11, Problem 7SEB

To determine

Journalize the transactions related to cash payments.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Chapter 11, Problem 6SEB

Chapter 11, Problem 8SEB

Students have asked these similar questions

Sub. Account

Subject:- General Account

Chapter 11 Solutions

College Accounting - Study Guide / Working Papers 1-15

Ch. 11 - Prob. 1TF Ch. 11 - Prob. 2TF Ch. 11 - A trade discount is a reduction from the list or...Ch. 11 - Prob. 4TF Ch. 11 - FOB shipping point means that transportation...Ch. 11 - Prob. 1MC Ch. 11 - In the income statement, Freight-In is (a) added...Ch. 11 - Prob. 3MC Ch. 11 - The difference between merchandise available for...Ch. 11 - Prob. 5MC

Ch. 11 - Prob. 1CE Ch. 11 - Prob. 2CE Ch. 11 - Prob. 3CE Ch. 11 - Prob. 4CE Ch. 11 - Identify the major documents commonly used in the...Ch. 11 - Prob. 2RQ Ch. 11 - What is a voucher system?Ch. 11 - Prob. 4RQ Ch. 11 - Describe how each of the following accounts is...Ch. 11 - How are cost of goods sold and gross profit...Ch. 11 - Prob. 7RQ Ch. 11 - Prob. 8RQ Ch. 11 - What steps are followed in posting purchases...Ch. 11 - What steps are followed in posting cash payments...Ch. 11 - Prob. 11RQ Ch. 11 - If the total of the schedule of accounts payable...Ch. 11 - Prob. 1SEA Ch. 11 - Prob. 2SEA Ch. 11 - Prob. 3SEA Ch. 11 - Prob. 4SEA Ch. 11 - JOURNALIZING PURCHASES TRANSACTIONS Journalize the...Ch. 11 - JOURNALIZING PURCHASES RETURNS AND ALLOWANCES AND...Ch. 11 - Prob. 7SEA Ch. 11 - SCHEDULE OF ACCOUNTS PAYABLE Ryans Express, a...Ch. 11 - PURCHASES TRANSACTIONS J. B. Speck, owner of...Ch. 11 - CASH PAYMENTS TR ANS ACTIONS Sam Santiago operates...Ch. 11 - PURCHASES AND CASH PAYMENTS TRANSACTIONS Emily...Ch. 11 - SCHEDULE OF ACCOUNTS PAYABLE Based on the...Ch. 11 - Prob. 1SEB Ch. 11 - TRADE DISCOUNT AND CASH DISCOUNTS Merchandise was...Ch. 11 - PURCHASE TRANSACTIONS AND T ACCOUNTS Using T...Ch. 11 - COMPUTING GROSS PROFIT The following data were...Ch. 11 - JOURNALIZING PURCHASES TRANSACTIONS Journalize the...Ch. 11 - JOURNALIZING PURCHASES RETURNS AND ALLOWANCES AND...Ch. 11 - Prob. 7SEB Ch. 11 - SCHEDULE OF ACCOUNTS PAYABLE Crystals Candles, a...Ch. 11 - PURCHASES TRANSACTIONS Ann Benton, owner of...Ch. 11 - CASH PAYMENTS TRANSACTIONS Kay Zembrowski operates...Ch. 11 - PURCHASES AND CASH PAYMENTS TRANSACTIONS Debbie...Ch. 11 - SCHEDULE OF ACCOUNTS PAYABLE Based on the...Ch. 11 - You are working as a summer intern at a rapidly...Ch. 11 - Prob. 1EC Ch. 11 - Michelle French owns and operates Books and More,...Ch. 11 - Prob. 1CP

Knowledge Booster

Similar questions

SEE MORE QUESTIONS

Recommended textbooks for you

College Accounting, Chapters 1-27
Accounting
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:Cengage Learning,
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
Century 21 Accounting Multicolumn Journal
Accounting
ISBN:9781337679503
Author:Gilbertson
Publisher:Cengage
Financial & Managerial Accounting
Accounting
ISBN:9781337119207
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Cengage Learning
Financial Accounting
Accounting
ISBN:9781337272124
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Cengage Learning
Quickbooks Online Accounting
Accounting
ISBN:9780357391693
Author:Owen
Publisher:Cengage