Question

Purchase-Related Transactions The debits and credits for four related entries for a purchase of $40,000, terms 2/10, n/30, are presented in the following T accounts. Cash (2)450 (4)34,300 Accounts Payable (3)4,900(1)39,200 (4)34,300 Merchandise Inventory (1)39,200(3)4,900 (2)450 Describe each transaction. 1. 2. 3. 4.

Answer 1

Note: The organized question is attached

Description of each transaction

1. Merchandise purchased on account as a cost of $39,200, which is $40,000 less 2% discount of $800

2. Paid fright charge of $450

3. An allowance or return of merchandise was granted by the seller, $4,900, which is an invoice amount of $5,000 less 2% discount of $100

4. The balance due of $34,300 ($39,200 - $4,900) was paid within the discount period