On April 6, 2018, Home Furnishings purchased $42,000 of merchandise from Una\'s
ID: 2409380 • Letter: O
Question
On April 6, 2018, Home Furnishings purchased $42,000 of merchandise from Una's Imports, terms 1/10 n/45. On April 8, Home Furnishings returned $8,800 of the merchandise to Una's Imports for credit. Home Furnishings paid cash for the merchandise on April 15, 2018 Required a. What is the amount that Home Furnishings must pay Una's Imports on April 15? b. Record the events in a horizontal statements model. In the Cash Flow column, use OA to designate operating activity, IA for investment activity, FA for financing activity, NC for net change in cash and NA to indicate the element is not affected by the event. c. How much must Home Furnishings pay for the merchandise purchased if the payment is not made until April 20, 2018? d. Record the payment of the merchandise in Requirement (c) in a horizontal statements. In the Cash Flow column, use OA to designate operating activity, IA for investment activity, FA for financing activity, NC for net change in cash and NA to indicate the element is not affected by the event. Answer is not complete. Complete this question by entering your answers in the tabs below Required A Required B Required CRequired D Record the events in a horizontal statements model. In the Cash Flow column, use OA to designate operating activity, IA for investment activity, FA for financing activity, NC for net change in cash and NA to indicate the element is not affected by the event. (Enter any decreases to account balances and cash outflows with a minus sign.) HOME FURNISHINGS Effect of Events on the Financial Statements Balance Sheet Income Statement Statement of Cash Flows Events Assets Liabilities + Stockholders' Equity Retained RevenueExpenses Earnings Net Income Merchandise 42,000 (8,800) (332) 32,868 Common Stock Cash Payable 42.000 (8,800) (332) Invento Purchase inventory Return inventory = Paid accounts 32,868 + 32,868 OA ableExplanation / Answer
Answers
Amount purchased = $ 42,000
Purchased on: April 6, 2018
Term of Discount = 1% discount if payment made within 10 days [1/10]
Payment made on: April 15, which is UNDER discount term. Hence, discount on purchase will be availed.
Base amount for discount = Total purchased amount – Merchandise returned
= 42000 – 8800 = $ 33,200
Discount on Purchase = 33200 x 1% = $ 332
Answer: Amount to be paid on April 15 = 33200 – 332 = $ 32,868
Note: “Paid accounts payable” implies outflow of cash, hence figure will be negative, either use minus sign or put the figure within “ ( )”.
Fully solved:
Assets
Liabilities
Stockholder's Equity
Income Statement
Event
Cash
Merchandise Inventory
Accounts Payable
Common Stock
Retained earnings
Revenue
Expenses
Net Income
Statement of Cash Flows
Purchase Inventory
$ 42,000.00
$ 42,000.00
Return Inventory
$ (8,800.00)
$ (8,800.00)
Discount percentage
$ (332.00)
$ (332.00)
Paid Accounts payable
$ (32,868.00)
$ (32,868.00)
$ (32,868) OA
---If the payment was made on April 20, the payment would have been made out of “Discount period” of 10 days.
---Amount to be paid = Total merchandise purchased – Merchandise value returned.
= $ 42,000 – $ 8,800 = $ 33,200
Hence, amount to be repaid on April 20 = $ 33,200
Assets
Liabilities
Stockholder's Equity
Income Statement
Event
Cash
Merchandise Inventory
Accounts Payable
Common Stock
Retained earnings
Revenue
Expenses
Net Income
Statement of Cash Flows
Paid Accounts payable
$ (33,200.00)
$ (33,200.00)
$ (33,200) OA
Assets
Liabilities
Stockholder's Equity
Income Statement
Event
Cash
Merchandise Inventory
Accounts Payable
Common Stock
Retained earnings
Revenue
Expenses
Net Income
Statement of Cash Flows
Purchase Inventory
$ 42,000.00
$ 42,000.00
Return Inventory
$ (8,800.00)
$ (8,800.00)
Discount percentage
$ (332.00)
$ (332.00)
Paid Accounts payable
$ (32,868.00)
$ (32,868.00)
$ (32,868) OA
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