Illustrate the effects on the accounts and financial statements of the following related transac-

tions of CT Diagnostic Company:

a. Purchased $560,000 of merchandise from Schultz Co. on account, terms 2/10, n/30.

b. Paid the amount owed on the invoice within the discount period.

c. Discovered that $40,000 of the merchandise was defective and returned items, receiving credit.

d. Purchased $25,000 of merchandise from Schultz Co. on account, terms n/30.

e. Received a check for the balance owed from the return in (c), after deducting for the pur- chase in (d)

(Warren 165)

Warren, Carl S. Survey of Accounting, 7th Edition. Cengage Learning, 20140101. VitalBook file.

The citation provided is a guideline. Please check each citation for accuracy before use.