Purchase-Related Transactions Journalize entries for the following related transactions of Lilly Heating & Air Company: a. Purchased $42,000 of merchandise from Schell Co. on account, terms 2/10, n/30. b. Paid the amount owed on the invoice within the discount period. c. Discovered that $8,400 before purchases discount of the merchandise was defective and returned items, receiving credit. d. Purchased $6,300 of merchandise from Schell Co. on account, terms n/30. e. Received a check for the balance owed from the return in (c), after deducting for the purchase in (d). a Inventory 41.160 Accounts Payable Schell Co. 41.160 b. Accounts Payable-Schell Co. 41.160 Cash 41.160 Accounts Payable Schell Co. G 8.400 X Inventory Feedback Choo My Work a. A purchase increases inventory and the amount that is owed on account b. A payment of the invoice within the discount period reduces Accounts Payable and Cash for the amount of the invoice less the discount c. This transaction reduces Merchandise Inventory and the Accounts Payable. Since this return was made after payment was made at the discounted price, the credit will be for the cost of returned goods less the discount. d. A purchase increases Merchandise Inventory and Accounts Payable e. Compare the amount owed in (d) with the amount credited to the buyer in (e), Cash refunded from the supplier will be for the difference between these two amounts Learning Objective 2. Previous Next All Wed Sun Assen for Grading