Question

Dec 3 Beacon purchases 30,000 bd. ft. of lumber from BWLC for $27,000. Again,

after reaching its credit limit it paid cash for the remaining amount.

I debited Merchandise Inventory for 27,000. The other accounts are CASH and Accounts Payable how do I figure out cash and Accounts payable?

Answer 1

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In this case, Up to Credit limit Amount Credited to Account payable and Remaining For Cash required to paid (Cash credited = 27000- Credit limit.)
For example, Suppose credit limit is 20000. Remaining cash 7000 required to pay.
Journal entries
Date	Account title	Debit	Credit
Dec 3	Merchandise Inventory	27000
	Accounts Payable		20000
	Cash		7000
	(To record purchased of Merchandise inventory.)