Question

At the preston company, purchases are recorded at net amounts. on august 5, $40,000 worth of merchandise was purchased on account for terms of 2/10, n/30 and recorded for $40,000. $3,000 of this merchandise was returned, and the account was credited for $3,000. to reflect the net amount, accounts payable should be adjusted by

Answer 1

After returning $3,000 worth of merchandise, the adjusted accounts payable for the Preston Company will be $37,000, reflecting the actual amount owed for the purchases made.

Step-by-step explanation:

The Preston Company recorded purchases of $40,000 at net amounts. When $3,000 of merchandise was returned, the accounts payable should be adjusted to reflect the net amount after the return. Initially, the purchase was recorded at $40,000; after returning $3,000 worth of merchandise, the correct accounts payable will be the initial amount less the return amount. Therefore, the adjusted accounts payable will be $40,000 - $3,000 = $37,000, reflecting the cost of merchandise that the company still owes to its suppliers.

Answer 2

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