Question

The Lawrence Company records its trade accounts payable net of any cash discounts. At the end of 2016, Lawrence had a balance of $300,000 in its trade accounts payable account before any adjustments related to the following items: 1. Goods shipped to Lawrence FOB shipping point were in transit on December 31. The invoice price of the goods was $50,000, with a 2% discount allowed for prompt payment. 2. Goods shipped to Lawrence FOB destination on December 29 arrived on January 2, 2017. The invoice price of the goods was $9,000, with a 4% discount allowed for payment within 20 days. 3. On December 10, Lawrence had recorded a shipment received. The recorded invoice price was $24,750, net, with a 1% discount allowed for payment within 14 days. At the end of the year, payment had not been made. At what amount should Lawrence report trade accounts payable on its December 31, 2016 balance sheet

Answer 1

The Lawrence Company

The amount that Lawrence should report trade accounts payable on its December 31, 2016 balance sheet is:

= $349,000.

Step-by-step explanation:

a) Data and Calculations:

Trade accounts payable balance on December 31, 2016 = $300,000

1. Shipment at FOB Shipping point at $50,000(2% discount) 49,000

2. Shipment at FOB destination on December 29 (Jan. 2) 0

3. Already recorded invoice of $24,750 (with 1% discount) 0

Total value of accounts payable balance on December 31 $349,000