10
Purchases and
1. Net purchases is calculated as follows: Purchases – Purchases Returns and Allowances –
Purchases Discount.
3. A reduction in cost such as Purchases Discount.
5. Disagree; buyer takes title when goods are received, not when shipped.
7. It’s a question of when postings and recordings are done.
order.
9. The recording of the purchase might take place when the invoice is approved for recording
and payment.
11. To show that the buyer does not owe as much because the item is being returned or
adjusted in cost due to defect.
13. Merchandise inventory; cost of goods sold.
15. Reduction to cost of merchandise inventory.
16. The question is whether Mel and Joanne should backdate the check in order to make the
discount period. Although a business should try to pay bills during the discount period, they
SOLUTIONS TO CHAPTER 10 CONCEPT CHECKS
1.
a.
Purchases
b.
Purchases Returns and Allowances
c.
Purchases Discount
d.
Debit Memorandum
e.
Schedule of Accounts Payable
f.
Accounts Payable Subsidiary Ledger
2. Accounts Category Increase Decrease Temporary or Permanent
Purchases
Cost
Dr.
Cr.
Purchases Returns and Allow.
Contra Cost
Cr.
Dr.
Purchases Discount
Contra Cost
Cr.
Dr.
3.
Net Purchases
=
$13
4.
a.
1, 2, 3
b.
1, 2, 3
c.
1, 2, 3
6.
RONSON.COM
SCHEDULE OF ACCOUNTS PAYABLE
MAY 31, 201X
Beland Co.
$ 41
Roy Co.
65
Total Accounts Payable
$106
7. Sale $1,000 $450 Cost of Goods Sold
^
/ \
8.
Accounts Payable, Pedro Co.
2
2
0
00
Merchandise Inventory
2
0
00
Cash
2
0
0
00
9.
Date
201X
Account Titles and Description
PR
Dr.
Cr.
Buyer:
Accounts Payable, Labrie Co.
2
7
5
00
Merchandise Inventory
2
7
5
00
Seller:
Sales Returns and Allowances
2
7
5
00
Accounts Receivable, Porter Morse
2
7
5
00
Merchandise Inventory
1
0
0
00
Cost of Goods Sold
1
0
0
00
10.
Merchandise Inventory
7
0
00
Cash
7
0
00
SOLUTIONS TO SET A EXERCISES
10A-1.
Courtland.com
Equipment
120
940 GJ2 6/3
6/8 GJ2 190
Harold.com
Accounts Payable
210
620 GJ2 6/4
940 6/3 GJ2
620 6/4 GJ2
190 6/8 GJ2
1,750 Bal.
Nickel.com
Purchases
510
190 GJ2 6/8
GJ2 6/3
940
GJ2 6/4
620
Bal.
1,560
10A-2.
Oct.
10
Accounts Payable, Roger Co.
211/√
4
4
0
00
Purchases Returns & Allowances
513
4
4
0
00
Issued Debit Memo #1
Roger Co.
Accounts Payable
211
Purchases Returns and
Allowances
513
10/10 GJ1 440
10/10 GJ1 440
440 10/10
GJ1
EXERCISES (CONTINUED)
10A-3.
PAGE 2
Date
201X
Account Titles and Description
PR
Dr.
Cr.
Apr.
1
Accounts Payable, A. Jordan
210/√
5
0
0
00
Purchases Discount
511
3
5
00
Cash
110
4
6
5
00
8
Advertising Expense
610
1
0
1
00
Cash
110
1
0
1
00
15
Accounts Payable, B. Thomas
210/√
2
0
0
00
Cash
110
2
0
0
00
ACCOUNTS PAYABLE SUBSIDIARY LEDGER
PARTIAL GENERAL LEDGER
A. Jordan
Cash
110
4/01 GJ2 500
500
3,100
465 GJ2 4/1
101 GJ2 4/8
Bal. 0
200 GJ2 4/15
Bal. 2,334
B. Thomas
Accounts Payable
210
4/15 GJ2 200
200
4/1 GJ2 500
1,200
4/15 GJ2 200
Bal. 0
500 Bal.
J. Wright
Purchases Discount
511
400
35 4/1 GJ2
B. Campbell
Advertising Expense
610
100
4/8 GJ2 101
EXERCISES (CONTINUED)
10A-4.
JACOB’S CLOTHING
SCHEDULE OF ACCOUNTS PAYABLE
APRIL 30, 201X
Wright
$ 400
Campbell
100
Total Accounts Payable
$500
Accounts Payable
210
4-1 500
1,200
4-15 200
500 bal.
The schedule of accounts payable at April 30, 201X equals the accounts payable account at April 30,
201X.
10A-5.
Account Category Increase Dr. or Cr.
Purchases
Cost
↑
Dr. $9,400
Accounts Payable
Liability
↑
Cr. $9,400
10A-6.
(
List price
–
Trade discount
amount
)
x
(100% – Cash
discount)
= Actual Cost
(
$4,300
–
$1,333
)
x
(100% – 5%)
= $2,818.65
EXERCISES (CONTINUED)
10A-7.
Date
201X
Account Titles and Description
PR
Dr.
Cr.
Apr.
8
Merchandise Inventory
19
0
0
0
00
Accounts Payable, Bachand Supplies
19
0
0
0
00
15
Accounts Receivable
3
5
0
0
00
Sales
3
5
0
0
00
15
Cost of Goods Sold
2
0
0
0
00
Merchandise Inventory
2
0
0
0
00
20
Accounts Payable, Bachand Supplies
1
5
0
00
Merchandise Inventory
1
5
0
00
EXERCISES (CONCLUDED)
10A-9.
Date
201X
Account Titles and Description
PR
Dr.
Cr.
Apr.
5
Cash
1
3
5
0
00
Sales
1
3
5
0
00
5
Cost of Goods Sold
7
2
5
00
Merchandise Inventory
7
2
5
00
16
Sales Returns and Allowances
5
0
00
Cash
5
0
00
16
Merchandise Inventory
1
0
00
Cost of Goods Sold
1
0
00
Date
201X
Account Titles and Description
PR
Dr.
Cr.
Jul.
8
Accounts Receivable, Ring Co.
6
3
0
00
Sales
6
3
0
00
8
Cost of Goods Sold
3
9
0
00
Merchandise Inventory
3
9
0
00
12
Office Equipment
1
6
0
0
00
Accounts Payable, MEC Co.
1
6
0
0
00
13
Sales Returns and Allowances
2
0
0
00
Cash
2
0
0
00
13
Merchandise Inventory
2
5
00
Cost of Goods Sold
2
5
00
SOLUTIONS TO SET B EXERCISES
10B-1.
Eve.com
Equipment
120
930 GJ2 June 3
June 8 GJ2 220
Jack.com
Accounts Payable
210
610 GJ2 June 4
930 June 3
610 June 4
220 June 8
1760 Balance
Noel.com
Purchases
510
220 GJ2 June 8
June 3
930
June 4
610
Bal.
1,540
10B-2.
Dec.
10
Accounts Payable, Line Co.
211/√
4
3
0
00
Purchases Returns & Allowances
513
4
3
0
00
Issued Debit Memo #1
Line Co.
Accounts Payable
211
Purchases Returns and
Allowances
513
12/10 GJ1 430
12/10 GJ1 430
430 12/10 GJ1
EXERCISES (CONTINUED)
10B-3.
PAGE 2
Date
201X
Account Titles and Description
PR
Dr.
Cr.
Apr.
1
Accounts Payable, A. Jae
210/√
1
4
0
0
00
Purchases Discount
511
1
4
00
Cash
110
1
3
8
6
00
8
Advertising Expense
610
9
6
00
Cash
110
9
6
00
15
Accounts Payable, B. Miller
210/√
8
0
0
00
Cash
110
8
0
0
00
ACCOUNTS PAYABLE SUBSIDIARY LEDGER
PARTIAL GENERAL LEDGER
A. Jae
Cash
110
4/01 GJ2 1,400
1,400
3,600
1,386 GJ2 4/1
96 GJ2 4/8
Bal. 0
800 GJ2 4/15
Bal. 1,318
B. Miller
Accounts Payable
210
4/15 GJ2 800
800
4/1 GJ2 1,400
3,550
4/15 GJ2 800
Bal. 0
1,350 Bal.
J. Hall
Purchases Discount
511
1,100
14 4/1 GJ2
B. Parker
Advertising Expense
610
250
4/8 GJ2 96