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    beplmi's Avatar
    beplmi Posts: 62, Reputation: 3
    Junior Member
    		  
    #1

    Sep 27, 2013, 04:05 PM
    Accounting help
    Im confused on how to journalize this:

    -Purchased murchandise on account from Company A, 5000 Terms 1/15, N/EOM, FOB shipping point

    The part I don't get is this:
    Made payment to Company A for goods purchased above, less return and discount.

    I don't even know where to begin

    Please help.
    pready's Avatar
    pready Posts: 3,197, Reputation: 207
    Ultra Member
    		  
    #2

    Sep 27, 2013, 04:22 PM
    First you have to compute 1% of $5,000 which will be the amount of the discount received. Now take the $5,000 minus the discount to get the amount of the payment.

    Your journal entry will be:
    Debit Accounts Payable for 5,000
    Credit Cash for the amount of the payment
    Credit Purchase Discounts for the amount of the discount

    If there was a return of part of the merchandise purchased you will have to reduce the $5,000 by the amount of merchandise returned. Then use this amount for the $5,000 in the calculations above.
    beplmi's Avatar
    beplmi Posts: 62, Reputation: 3
    Junior Member
    		  
    #3

    Sep 27, 2013, 05:23 PM
    Oh, I get it. Thank you!
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