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24 November, 06:08

Q 5.24: crump company purchased $1,850 worth of inventory on account from payne industries on may 8th. the terms were 3/15, n/eom. crump also paid freight charges of $95 on may 9th. payne granted crump a $150 purchase allowance for slightly damaged goods. prepare the journal entry on may 17th when crump pays the invoice in full.

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  1. 24 November, 08:41
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    Given:

    MAY 8 - Crump company purchased $1,850 worth of inventory on account from Payne industries; the terms were 3/15, n/eom.

    MAY 9 - Crump also paid freight charges of $95

    Payne granted crump a $150 purchase allowance

    MAY 17 - Payment in full

    Debit Credit

    May 8.

    Purchases 1,850

    Accounts Payable 1,850

    May 9

    Freight-In 95

    Cash 95

    Accounts Payable 150

    Purchase returns and allowance 150

    May 17 - Payment goes beyond the discounting period. No discount is given.

    Accounts Payable 1,700

    Cash 1,700

    (1,850 - 150 = 1,700)

    "3/15, n/eom" This means that Crump can avail 3% discount when it pays on the 15th of the month and n discount when it pays at the end of the month.
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