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Purchases Transactions
Rolfes Company purchased merchandise on account from Springhill Company for $5,200, terms 1/10, /30. Roles returned merchandise with an invoice amount of $1,200 and received full credit.
a. If Rolfes Company pays the invoice within the discount period, what is the amount of cash required for the payment? If required, round the answer to the nearest dollar
b. What account is debited by Rolfes Company to record the return?
Accounts Payable-Springhill Company
(a) Since buyers normally take all purchase discounts, the net purchase price is recorded at the time of purchase if the buyer makes a retum of merchandise or is granted a price allowance for an invoice with a purchase decourt, the amount d
invoice price less the decount
)Any discounts or retums are recorded directly by the buyer who reduces the balances of Accounts Payable and Merchandise Inventory, using a diot memo based on the net cost of the merchandoe
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