Question

William's Restaurant buys cupcakes from James'Bakery. The credit terms are 1%/5/net 15. The purchase price is $1.50 per cupcake. William uses a perpetual inventory system. William's most recent purchase is for 1,000 cupcakes. What amounts are entered into each account to record the transaction in which the cup cakes are purchased? (enter each answer using a number with two decimal places and no dollar signs; e.g., 2.50)

• Revenue [A]
• Cost of Goods Sold [B]
• Accounts Payable [C]
• Inventory [D]
• Cash [E]
• Discounts, returns, and allowances [F]

Answer 1

William's Restaurant buys cupcakes from James'Bakery. The credit terms are 1%/5/net 15. The purchase price is $1.50 per cupcake. William uses a perpetual inventory system. William's most recent purchase is for 1,000 cupcakes

Cost of inventory purchased = Number of cupcakes purchased x purchase price per cupcake.

= 1,000 x 1.50

= $1,500

Accounts payable = $1,500

Revenue [A]	0
Cost of Goods Sold [B]	0
Accounts Payable [C]	$1,500
Inventory [D]	$1,500
Cash [E]	0
Discounts, returns, and allowances [F]	0