Question

Journalize the following transactions: Debit Credit 1 Purchased $10,000 worth of merchandise (to resell) for cash. debit account here = Merchandise Inventory credit account here = Cash 10,000 10,000 2 Purchased $20,000 of merchandise on account. 20,000 20,000 3 Returned $1,000 of merchandise from Transaction 2. 1,000 1,000 4 Received a $2,000 allowance for damaged merchandise from Transaction 2. 2,000 2,000 5 Paid for merchandise purchased on account ($20,000 - 1,000 - 2,000) and received a 2% cash discount. What is the buyer's asset account for goods that it will sell?

Answer 1

No.	Account Titles and Explanation	Debit	Credit
1	Merchandise Inventory	$10,000
`	Cash		$10,000
	(To record purchase of merchandise for cash)
2	Merchandise Inventory	$20,000
`	Accounts Payable		$20,000
	(To record purchase of merchandise on credit)
3	Accounts Payable	$1,000
	Merchandise Inventory		$1,000
	(To record the return of Merchandise)
4	Accounts Payable	$2,000
	Merchandise Inventory		$2,000
	(To record allowance for damaged goods)
5	Accounts Payable                     [Payable amount = Total purchases - Returns - Allowances = $20,000 - $1,000 - $2,000]	$17,000
	Merchandise Inventory        [Discount = Payable amount x 2% = $17,000 x 2%]		$340
	Cash                                     [Payable amount - Discount = $17,000 - $340]		$16,660
	(To record cash payment)

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Buyers asset account for goods that it will sell = "Merchandise Inventory" account