Scribd
Upload
17 views1 page

January 9: Accounts Payable Cash Purchase Discount

On January 2, 2022, the company purchased merchandise on account from BQ with terms allowing a 3% discount if paid within 10 days. On January 9, the company paid the account, recording a debit to Accounts Payable of 170,000, a credit to Cash of 164,900, and a credit to Purchase Discount of 5,100. The purchase discount reflects the 3% savings for early payment calculated from the total accounts payable.

Uploaded by

jasbaay
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
17 views1 page

January 9: Accounts Payable Cash Purchase Discount

On January 2, 2022, the company purchased merchandise on account from BQ with terms allowing a 3% discount if paid within 10 days. On January 9, the company paid the account, recording a debit to Accounts Payable of 170,000, a credit to Cash of 164,900, and a credit to Purchase Discount of 5,100. The purchase discount reflects the 3% savings for early payment calculated from the total accounts payable.

Uploaded by

jasbaay
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 1

As we recall, on January 2, 2022, the company purchased merchandise on

account from BQ with terms 3/10, n/30. This indicates that although the
merchandise has been obtained, payment has not yet been made, and the
company will receive a 3% discount if payment is made within 10 days.

We've previously recorded debit to purchases and credit to accounts


payable.

And now January 9, the company Paid the account due to BQ, the journal
entry would be:

January 9: Accounts Payable (BQ) 170,000

Cash (or Bank) 164,900

Purchase Discount 5,100

Explanation:

January 9, we debit Accounts Payable of 170,000 Since the business is


paying off its debt, this will be deducted to the accounts payable ledger.
Next, is Credit purchase discount 5,100 which is given to the company for
paying within the discount period. The purchase discount is calculated as 3%
of the accounts payable 170,000 x 3%, which is 5,100.
And we also credit cash of 164,900, Since the company pays within the
discount period so it only pays 164,900.
Thank you.

You might also like