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28 April, 12:56

Terry's Tree Removal paid cash on account to Sam's Sharpening Service, $735, covering Purchase Invoice No. 1415 for $750, less a 2% discount, $15. The journal entry for Terry's Tree Removal to record this transaction is:

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Answers (2)
  1. 28 April, 14:41
    0
    The journal entries necessary for the transactions are:

    Dr Accounts payable $750

    Cr Purchase discount $15

    Cr Cash $735

    Explanation:

    The payment of $735 in settlement of payable account of $750 means that cash account has reduced by $735, a credit entry as well as an increase income discount on purchases of $15.

    However, the payable accounts that has an invoice value of $750 is also reducing by $750 the value of the debt owed to the supplier, hence a debit is required to reverse the earlier recording of credit
  2. 28 April, 16:45
    0
    Given:

    Cash payment = $735

    Discount = 2%

    2% of $750

    = $15

    Invoice = $750

    Invoice of $750 is the initial cost of Sam's sharpening services with the discount of 2% of the invoice cost is $735 cash payment made by Terry's Tree Removal.

    Journal entry for Terry's Tree Removal:

    Debit:

    Accounts Payable/Sam's of sharpening Service = $750

    Credit:

    Purchases Discount = $15

    Cash payment = $735
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Home » Business » Terry's Tree Removal paid cash on account to Sam's Sharpening Service, $735, covering Purchase Invoice No. 1415 for $750, less a 2% discount, $15. The journal entry for Terry's Tree Removal to record this transaction is:
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