Question

​Joy's Accessories bought 69 necklaces for $ 11 each on account. The payment terms of 3​/10, ​n/30. In​ addition, 9 necklaces were returned prior to payment. The entry to record the initial purchase would​ include:

Answer 1

Answer:

To record the initial purchase, the entries required in Joy's Accessories are:

Debit Purchases Account with 69x$11 - $759

Credit Supplier's Account (Accounts Payable) - $759

Explanation:

The initial purchase is recorded as it was made without taking into account activities that happened after.

Once value had been received, it is recognized immediately.  When 9 necklaces are returned before payment, then the entries above would be reduced by 9 x $11 or $99 through Purchases Return Account.

If payment is made within 10 days, Joy's Accessories will be able to take advantage of the 3% cash discount offered by the supplier and then pays the net value.  And subsequently, this will be recognized in the books.