Question

Fuentes Company

1. Sold merchandise on account to Lowe Company, $1,350; terms 2/10, n/30.
2. Issued a credit memo to Lowe Company for damaged merchandise, $100.
3. Lowe Company paid the account in full within the discount period.

GENERAL JOURNAL					PAGE
TRANSACTION	DESCRIPTION		POST. REF.	DEBIT	CREDIT
(a)
	Sold merchandise to Lowe Company, terms 2/10, n/30.
(b)
	Issued credit memo for return of merchandise.
(c)
	Received payment in full.

Lowe Company

1. Purchased merchandise on account from Fuentes Company, $1,350; terms 2/10, n/30.
2. Received a credit memo from Fuentes Company for damaged merchandise, $100.
3. Paid Fuentes Company in full within the discount period.

GENERAL JOURNAL					PAGE
TRANSACTION	DESCRIPTION		POST. REF.	DEBIT	CREDIT
(a)
	Purchased merchandise from Fuentes Company, terms 2/10, n/30.
(b)
	Received credit memo for damaged merchandise.
(c)
	Paid invoice in full.

Answer 1

Fuentes Company

Transaction	Account Titles and Explanations	Debit	Credit
a	Accounts receivable	$   1,350
	Sales		$   1,350
	(Sold merchandise to Lowe Company, terms 2/10, n/30.)
b	Sales return	$      100
	Accounts receivable		$      100
	(Issued credit memo for return of merchandise.)
d	Cash ($1,350-$100)*98%)	$   1,225
	Sales discounts	$        25
	Accounts receivable		$   1,250
	(Received payment in full.)

Lowe Company

Transaction	Account Titles and Explanations	Debit	Credit
a	Purchases	$   1,350
	Accounts payable		$   1,350
	(Purchased merchandise from Fuentes Company, terms 2/10, n/30.)
b	Accounts payable	$      100
	Purchase return		$      100
	(Received credit memo for damaged merchandise.)
c	Accounts payable	$   1,250
	Purchase discounts ($1,250*2%)		$        25
	Cash		$   1,225
	(Paid invoice in full.)

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