Purchase-Related Transactions

Steritech Co., a furniture wholesaler, sells merchandise to Butler Co. on account, $86,000, terms 2/10, n/30. The cost of the merchandise sold is $51,600. Steritech Co. issues a credit memorandum for $5,000 ($4,900 net of the 2% discount) for merchandise that was damaged in shipment. Butler Co. agreed to keep the damaged merchandiise. Illustrate the effects on the accounts and financial statements of Butler Co.

If no account or activity is affected, select "No effect" from the dropdown and leave the corresponding number entry box blank. Enter account decreases and cash outflows as negative amounts.

a. The purchase.

Statement of Cash Flows	Balance Sheet								Income Statement
	Assets			=	Liabilities	+	Stockholders' Equity
		+		=		+
Statement of Cash Flows								Income Statement

b. The credit for damaged merchandise.

Statement of Cash Flows	Balance Sheet								Income Statement
	Assets			=	Liabilities	+	Stockholders' Equity
		+		=		+
Statement of Cash Flows								Income Statement

c. The payment of the invoice within the discount period.

Statement of Cash Flows	Balance Sheet								Income Statement
	Assets			=	Liabilities	+	Stockholders' Equity
		+		=		+
Statement of Cash Flows								Income Statement

fustrate the effets on he accounts and Snaedal statements of Butter Co. dropdowe and leave the corresponding number entry bex biank. Enter account decreases and cash outflos as negative amounts If no account or activity is affected, select "No effect from the a. The purchase Balace Sheet Statement of Cash Steckholders' Equity statement Statement of Cash Flows . The oredit for damaged merchandise Stockholders' Equlty Statement Statement of Cash Assets Statement of Cash Flows The payment of the inoice withle the discoure peried