HappyHome is a factory specialized in sales and manufacturing of several ranges

Question

HappyHome is a factory specialized in sales and manufacturing of several ranges of home appliances. Inventory of microwave ovens is low (<=50) in Jeddah plant. Therefore it is necessary to procure more microwave ovens.

HappyHome is purchasing 200 microwave ovens from Xcite electronics with a unit price= 99 SAR.

Record financial impacts of this purchase transaction using the relevant T-accounts.

N.B. include in one figure impacts for the steps of goods receipt, invoice verification and payment processing.

Explanation / Answer

T Accounts

S.no Particular Debit Credit 1. Purchase $ 19800 Excite Electronics $ 19800 (Purchase recorded) 2. Excite Electronics $ 19800 Cash $ 19800 (Cash paid for the purchases recorded) 3. Inventory A/c $ 19800 Purchase $ 19800 (Goods recived)

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