Journal Entry for Merchandise Allowance: Debit Accounts Payable,

School: Embry-Riddle Aeronautical University - Course: ACCT 210 - Subject: Accounting

Your Answer On Dec. 20, XsMart received a $100 allowance because the merchandise it purchased on account, earlier in the month, was of poor quality. Demonstrate the requiredjournal entry on X—Mart's books for the allowance assuming the perpetual inventory method. Debit Merchandise Inventory $100; credit Accounts Payable $100. Reason: Your debits and credits are reversed. Since they received an allowance for damaged merchandise, you will need to debit Accounts Payable and credit Merchandise Inventory to reduce them. Even though the merchandise wasn't actually returned, theiournal entry for an allowance is handled the same as a return. Debit Accounts Payable $100; credit Purchase Returns $100. Reason: Credit Merchandise Inventory. Merchandise Inventory is credited because the merchandise was of inferior quality. Since they returned merchandise they purchased, you will need to debit Accounts Payable and credit Merchandise Inventory to reduce them. Debit Accounts Payable $100; credit Cash $100. Reason: Cash is not involved. You need to credit Merchandise Inventory. Since they received an allowance for damaged merchandise, you will need to debit Accounts Payable and credit Merchandise Inventory to reduce them. Even though the merchandise wasn't actually returned, thejournal entry for an allowance is handled the same as a return. Debit Accounts Payable $100; credit Merchandise Inventory $100. Correct Answer Debit Accounts Payable $100; credit Merchandise Inventory $100.

Expert's Answer

Your future, our responsibilty submit your task on time.

Order Now

Need Urgent Academic Assistance?

Get Professional Help at Low Prices!

*
*
*


*

TOP
Order Notification

[variable_1] from [variable_2] has just ordered [variable_3] Assignment [amount] minutes ago.