Question

Journalize entries for the following related transactions of Lilly Heating \& Air Company using the net method under a perpetual inventory system. a. Purchased $36,000 of merchandise from Schell Co. on account, terms 1/10,n/30.

Answer 1

To journalize entries for the given transaction, we would need to consider the accounts affected and their corresponding debits and credits. The journal entry for this purchase transaction is: Merchandise Inventory is debited for $36,000, and Accounts Payable is credited for $36,000.

Step-by-step explanation:

To journalize the entries for the given transaction using the net method under a perpetual inventory system, we would need to consider the accounts affected and their corresponding debits and credits. In this case, the transaction is a purchase of merchandise on account.

The journal entry is as follows:

1. Date: Date of the transaction
2. Account: Merchandise Inventory
3. Debit: $36,000
4. Account: Accounts Payable
5. Credit: $36,000

By debiting the Merchandise Inventory account, we record an increase in the inventory asset. By crediting the Accounts Payable account, we record an increase in the amount owed to the supplier.