Question

(Purchases Recorded Net) Presented below are transactions related to Guillen, Inc. May 10 Purchased goods billed at $20,000 subject to cash discount terms of 2/10, n/60.

11 Purchased goods billed at $15,000 subject to terms of 1/15, n/30.

19 Paid invoice of May 10.

24 Purchased goods billed at $11,500 subject to cash discount terms of 2/10, n/30.

Instructions

(a) Prepare general journal entries for the transactions above under the assumption that purchases are to be recorded at net amounts after cash discounts and that discounts lost are to be treated as financial expense.

(b) Assuming no purchase or payment transactions other than those given above, prepare the adjusting entry required on May 31 if financial statements are to be prepared as of that date.

(Give the complete answer)

Answer 1

Part-a:- Journal Enty-Guillen Inc.
Date	Accoutn Tittle	Debit	Credit
10-May	Purchase (2000*98%)	$19,600.00
	Accounts Payable		$19,600.00
11-May	Purchase (15000*99%)	$14,850.00
	Accounts Payable		$14,850.00
19-May	Accounts payable	$19,600.00
	Cash		$19,600.00
24-May	Purchase (11500*98%)	$11,270.00
	Accounts Payable		$11,270.00
Part-b:- Adjusting Journal Enty-Guillen Inc.
Date	Accoutn Tittle	Debit	Credit
31-May	Purchase Discount (15000*1%)	$150.00
	Accounts Payable		$150.00