Question

The following selected transactions were completed during August between Seller Company and Buyer Co.:
- Aug. 5: Seller Company sold merchandise on account to Buyer Co., $66,000, terms FOB shipping
point, 2/15 n/eom. The cost of the Goods sold was $40,000
- Aug. 9: Buyer Co. paid freight of $2,300 on August 5 purchase from Seller Company.
- Aug. 15: Seller Company sold merchandise on account to Buyer Co., $58,700, terms FOB shipping
point, 1/10, n/30. Seller Company paid freight of $1,675, which was added to the invoice. The cost of
the goods sold was $35,000.
- Aug. 20: Buyer Co. paid Seller Company for purchase of August 5.
- Aug. 25: Buyer Co. paid Seller Company for purchase of August 15
Journalize the August transactions Buyer Co on the following page. Show your calculations.= + - + -
Accounting Equation and Debit/Credit Rules
Complete the Accounting Equation below by placing the following account types in the proper order to
complete the accounting equation: Assets, Common Stock, Dividends, Expenses, Liabilities and
Revenues. Indicate the increase side of the account with “+” and the decrease side with a “-“.

Answer 1

Answer:

Assets (+) - Liabilities (-) + Common Stock (+) - Dividends (-) + Revenues (+) - Expenses (-)

Assets (+) - Liabilities (-) = Equity (+)

Step-by-step explanation:

Here are the journal entries for Buyer Co.:

1. Aug. 5:

Accounts Receivable: $66,000

Merchandise Inventory: $40,000

Purchase Discounts: $1,320

Accounts Payable: $64,680

2.Aug. 9:

Accounts Payable: $2,300

Cash: $2,300

3. Aug. 15:

Accounts Receivable: $58,700

Merchandise Inventory: $35,000

Purchase Discounts: $585

Accounts Payable: $58,000

4. Aug. 20:

Accounts Payable: $64,680

Cash: $63,307.20

5. Aug. 25:

Accounts Payable: $58,000

Cash: $57,414.15

And the accounting equation:

Assets (+) - Liabilities (-) = Equity (+)

This indicates that assets increase on the debit side, liabilities decrease on the debit side, and equity increases on the credit side.