Question

The following information pertains to the acquisition of an asset by Torres Company during the year;

	FURNITURE
Invoice price	P 30,000
Date bought	February 1
Trade discount	10%
Terms	20% down, balance 2/10, n/30
Freight paid	P500
Allowance granted	3,000
Date allowance granted	February 3
Partial payment made	P6,000
Date of partial payment	February 5
Date of full payment of account	February 10

Required:

1.1 From the given information, journalize

a.     the acquisition

b.     the incurrence of expense

c.     the granting of allowance

d.     the partial payment

e.     the full payment of account

1.2 Determine the cost of the asset.

Answer 1

1.1	Journal
	Sr. No.	Date	Particulars	Debit (P)	Debit (P)
	a	Feb-01	Furniture A/c                                           Dr.	27,000
			To Cash		5,400
			To Vendor's A/c		21,600
			(Being asset aquired and downpayment made)
	b		Furniture A/c                                           Dr.	500
			To Cash		500
			( Being freight paid for furtniture)
	c	Feb-03	Vendor's A/c                                            Dr.	3,000
			To Allowances		3,000
			( Being Allowance granted)
	d	Feb-05	Vendor's A/c                                            Dr.	6,122
			To Cash		6,000
			To Allowance /Cash discount		122
			( Being partial payment made and cash dicount availed for early payment)
	e	Feb-10	Vendor's A/c                                            Dr.	12,478
			To Cash		12,228
			To Allowance /Cash discount		250
			( Being full payment made and cash dicount availed for early payment)
	Computation of Allowance/Cash Discount
	Feb-05	=6,000/.98*2%	122
	Feb-10	=12,478*2%	250
1.2	Cost of Asset	=27,000+500	27,500