Question

Purchase-Related Transactions

The debits and credits from four related transactions are presented in the following T accounts.

Cash					Accounts Payable
		(2)	300		(3)	3,920	(1)	20,580
		(4)	16,660		(4)	16,660
Inventory
(1)	20,580	(3)	3,920
(2)	300

Describe each transaction.

1.

2.

3.

4.

Answer 1

Purchase-Related Transactions
Journal Enteries
Event	Particulars	Debit in $	Credit in $
1	Inventory a/c                                 Dr.	20580
	To Accounts Payable		20580
	(Inventory purchased on account)
2	Inventory a/c                                 Dr.	300
	To Cash		300
	(Freight paid on purchase)
3	Accounts Payable a/c                  Dr.	3920
	To Inventory		3920
	(Inventory returned to supplier)
4	Accounts Payable a/c                  Dr.	16660
	To Cash		16660
	(Accounts Payable paid in cash)