Showcase Co., a furniture wholesaler, sells merchandise to Balboa Co. on account, $25,300, terms n/30. The cost of the merchandise sold is $15,200. Showcase Co. issues a credit memo for $4,300 as a price adjustment prior to Balboa Co. paying the original invoice.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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**Purchase-Related Transactions**

Showcase Co., a furniture wholesaler, sells merchandise to Balboa Co. on account for $25,300, terms n/30. The cost of the merchandise sold is $15,200. Showcase Co. issues a credit memo for $4,300 as a price adjustment prior to Balboa Co. paying the original invoice.

**a. Journalize Balboa Co.’s entry for the purchase. If an amount box does not require an entry, leave it blank.**

- Merchandise Inventory [Debit]
- Accounts Payable-Showcase Co. [Credit]

**b. Journalize Balboa Co.’s entry for the credit memo. If an amount box does not require an entry, leave it blank.**

- Accounts Payable-Showcase Co. [Debit]
- Merchandise Inventory [Credit]

**c. Journalize Balboa Co.’s entry for the payment of the invoice. If an amount box does not require an entry, leave it blank.**

- Accounts Payable-Showcase Co. [Debit]
- Cash [Credit]
Transcribed Image Text:**Purchase-Related Transactions** Showcase Co., a furniture wholesaler, sells merchandise to Balboa Co. on account for $25,300, terms n/30. The cost of the merchandise sold is $15,200. Showcase Co. issues a credit memo for $4,300 as a price adjustment prior to Balboa Co. paying the original invoice. **a. Journalize Balboa Co.’s entry for the purchase. If an amount box does not require an entry, leave it blank.** - Merchandise Inventory [Debit] - Accounts Payable-Showcase Co. [Credit] **b. Journalize Balboa Co.’s entry for the credit memo. If an amount box does not require an entry, leave it blank.** - Accounts Payable-Showcase Co. [Debit] - Merchandise Inventory [Credit] **c. Journalize Balboa Co.’s entry for the payment of the invoice. If an amount box does not require an entry, leave it blank.** - Accounts Payable-Showcase Co. [Debit] - Cash [Credit]
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