1. purchase goods for resale in cash: $ 815 (perpetual inventory method is used)
Debit $815 in Inventory account
Credit $815 in Cash account
2. Company issues a note to buy a truck for an amount of $39,815
Debit $39,815 in equipment (Truck) account
Credit $39,815 in Notes Payable (Truck) account
3. To cancel 10% of the note issued to buy the truck, the company delivers inventory
for an amount of 20% of the acquisition made in queston #1 above.
Debit $3,981.5 in Notes Payable (Truck) account
Credit $3,981.5 in cancellation on enquipment truck account, which is a contra account of equpment truck account I have created for this transaction
Since the question "the company delivers inventory for an amount of 20% of the acquisition madein question #1 above" sounds like
the company gets 10% cancellation of the note issued to buy the truck in exchange of inventory delivery (20% of the $815),
I need to debit $163 (20% of $815) in inventory account and credit $163 in an expense account which I can name Trade expense(?)
1.
Debit $815 in Inventory account
Credit $815 in Cash account
2.
Debit $39,815 in equipment (Truck) account
Credit $39,815 in Notes Payable (Truck) account
3.
Debit $3,981.5 in Notes Payable (Truck) account
Credit $3,981.5 in cancellation on enquipment truck account, which is a contra account of equpment truck account I have created for this transaction and this account will
be deducted from equipment on balance sheet
Debit $163 in inventory account
Credit $ 163 in an expense account (What should I name the expense account?)
Am I correct for these records of transactions?
If I am wrong, please tell me the right journal entries for this transactions.
I don't actually know what to name the expense account that I have created in the question 3 (the company delivers inventory for an amount of 20% of the acquisition made in question #1)
I am sure that this transaction doesn't belogn to Cost of Goods Sold since the inventory wasn't used for its sales ?
Added 3+ months ago:
This question has been asked wrongly...... I have created a new question.... sorry ...
Added 3+ months ago:
Looks like I can't make another question in a minute...
Here I have posted the correct question I am trying to seek for an anwwer
1. purchase goods for resale in cash: $ 815 (perpetual inventory method is used)
Debit $815 in Inventory account
Credit $815 in Cash account
2. Company issues a note to buy a truck for an amount of $39,815
Debit $39,815 in equipment (Truck) account
Credit $39,815 in Notes Payable (Truck) account
3. To cancel 10% of the note issued to buy the truck, the company delivers inventory
for an amount of 20% of the acquisition made in queston #1 above.
Debit $3,981.50 in Cancellation on Notes Payable (Truck) account, a contra account for Notes Payable (Truck) account
Credit $3,981.50 in cancellation on enquipment truck account, which is a contra account of equpment truck account I have created for this transaction
Since the question says "the company delivers inventory for an amount of 20% of the acquisition made in question #1 above" sounds like
the company gets 10% cancellation of the note issued to buy the truck in exchange of inventory delivery (20% of the $815),
I need to debit $163 (20% of $815) in inventory account and credit $163 in an expense account which I can name Trade expense(?)
1.
Debit $815 in Inventory account
Credit $815 in Cash account
2.
Debit $39,815 in equipment (Truck) account
Credit $39,815 in Notes Payable (Truck) account
3.
Debit $3,981.50 in Cancellation on Notes Payable (Truck) account, a contra account for Notes Payable (Truck) account
Credit $3,981.50 in cancellation on enquipment truck account, which is a contra account of equpment truck account I have created for this transaction and this account will
be deducted from equipment on balance sheet
Debit $163 in inventory account
Credit $ 163 in an expense account (What should I name the expense account?)
Am I correct for these records of transactions?
If I am wrong, please tell me the right journal entries for this transactions.
I am not sure whether, regarding to question #3, I have to debit $ 3,981.50 directly in Notes Payable (Truck) account or create a contra account for Notes Pyable (Truck) account and debit the amout in the contra account (which I named "cancellation on Notes Pyable (Truck)" )
I don't actually know what to name the expense account that I have created in the question 3 (the company delivers inventory for an amount of 20% of the acquisition made in question #1)
I am sure that this transaction doesn't belogn to Cost of Goods Sold since the inventory wasn't used for its sales ?
PLEASE T_T