Question

Purchase-Related Transactions

Journalize entries for the following related transactions of Lilly Heating & Air Company:

1. Purchased $23,000 of merchandise from Schell Co. on account, terms 1/10, n/30.
2. Paid the amount owed on the The bill that the seller sends to the buyer.invoice within the discount period.
3. Discovered that $4,600 before purchases discount of the merchandise was defective and returned items, receiving credit.
4. Purchased $3,800 of merchandise from Schell Co. on account, terms n/30.
5. Received a check for the balance owed from the return in (c), after deducting for the purchase in (d).

a.	Inventory Accounts Payable-Schell Co. Cash Cost of Merchandise Sold Inventory Sales Discounts Sales Returns and Allowances Sales
	Accounts Payable-Schell Co. Accounts Payable-Schell Co. Cash Cost of Merchandise Sold Inventory Sales Discounts Sales Returns and Allowances Sales
b.	Accounts Payable-Schell Co. Accounts Payable-Schell Co. Cost of Merchandise Sold Inventory Purchases Sales Discounts Sales Returns and Allowances Sales
	Cash Accounts Payable-Schell Co. Cash Cost of Merchandise Sold Purchases Sales Discounts Sales Returns and Allowances Sales
c.	Accounts Payable-Schell Co. Accounts Payable-Schell Co. Cash Cost of Merchandise Sold Inventory Sales Sales Discounts Sales Returns and Allowances
	Inventory Accounts Payable-Schell Co. Cash Cost of Merchandise Sold Inventory Sales Discounts Sales Returns and Allowances Sales
d.	Inventory Accounts Payable-Schell Co. Cash Cost of Merchandise Sold Inventory Sales Discounts Sales Returns and Allowances Sales
	Accounts Payable-Schell Co. Accounts Payable-Schell Co. Cash Cost of Merchandise Sold Inventory Sales Sales Discounts Sales Returns and Allowances
e.	Cash Accounts Payable-Schell Co. Cash Cost of Merchandise Sold Inventory Sales Sales Discounts Sales Returns and Allowances
	Accounts Payable-Schell Co. Accounts Payable-Schell Co. Cash Cost of Merchandise Sold Inventory Sales Discounts Sales Returns and Allowances Sales

Answer 1

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Date	Account	Debit	Credit
a	Inventory	$ 23,000
	Accounts Payable-Schell Co.		$ 23,000
	(to record purchase of inventory)
b	Accounts Payable-Schell Co.	$ 23,000
	Inventory ($23,000*1%)		$       230
	Cash (plug in)		$ 22,770
	(To record payment to Schell)
c	Accounts Payable-Schell Co. (4600-1%)	$    4,554
	Inventory		$    4,554
	(to record return of goods)
d	Inventory	$    3,800
	Accounts Payable-Schell Co.		$    3,800
	(to record purchase of inventory)
e	Cash	$       754
	Accounts Payable-Schell Co.		$       754
	(to record amount received)