Problem 8-3 Some of the transactions of Buffalo Company during August are listed
ID: 2508821 • Letter: P
Question
Problem 8-3
Some of the transactions of Buffalo Company during August are listed below. Buffalo uses the periodic inventory method.
August 10 Purchased merchandise on account, $13,600, terms 2/10, n/30.
13 Returned part of the purchase of August 10, $1,200, and received credit on account.
15 Purchased merchandise on account, $16,800, terms 1/10, n/60.
25 Purchased merchandise on account, $21,600, terms 2/10, n/30.
28 Paid invoice of August 15 in full.
Assuming that purchases are recorded at gross amounts and that discounts are to be recorded when taken:
Prepare general journal entries to record the transactions.
Date Account Titles and Explanation Debit Credit
Assuming that purchases are recorded at net amounts and that discounts lost are treated as financial expenses: Prepare general journal entries to enter the transactions.
Date Account Titles and Explanation Debit Credit
Aug. 28
Assuming that purchases are recorded at net amounts and that discounts lost are treated as financial expenses: Prepare the adjusting entry necessary on August 31 if financial statements are to be prepared at that time.
Date Account Titles and Explanation Debit Credit
Aug. 31
Explanation / Answer
a.
b.
c
Date Accounts title Dr Cr August 10 Purchase $13,600 To Accounts payable $13,600 13 Accounts payable $1,200 To purhcase return and allowance $1,200 15 Purchase $16,800 To Accounts payable $16,800 25 Purchase 21,600 To Accounts payable 21,600 28 Accounts payable $16,800 To cash 16632 To purchase discount 168