Question : I need help figuring out the correct debit and credit amounts for both A & B?
This information relates to Prophet Co.

1.On April 5 purchased merchandise from Lombard Company for $ 25,000, terms 2/10, n/30.
2.On April 6 paid freight costs of $ 900 on merchandise purchased from Lombard.
3.On April 7 purchased equipment on account for $ 30,000.
4.On April 8 returned some of April 5 merchandise to Lombard Company which cost $ 3,600.
5.On April 15 paid the amount due to Lombard Company in full.

(a)Prepare the journal entries to record the transactions listed above on the books of Prophet Co. Prophet Co. uses a perpetual inventory system.
(b)Assume that Prophet Co. paid the balance due to Lombard Company on May 4 instead of April 15. Prepare the journal entry to record this payment.

For Part A I need help with the amount to debit for Acc. Payable, and the amount to credit for Cash and Merchandise Inventory. As well as for Part B I need help determining the amounts to debit for Acc. Payable and the amount credited for Cash.
credit help

Best answer:

Answer by Sandy
(a) Prepare the journal entries to record the transactions listed above on the books of Prophet Co.
1. On April 5 purchased merchandise from Lombard Company for $ 25,000, terms 2/10, n/30.
Dr Merchandise inventory (MI) $ 25,000
Cr Accounts payable (AP) $ 25,000

2. On April 6 paid freight costs of $ 900 on merchandise purchased from Lombard
Dr MI $ 900
Cr Cash $ 900

3. On April 7 purchased equipment on account for $ 30,000
Dr Equipment $ 30,000
Cr AP $ 30,000

4. On April 8 returned some of April 5 merchandise to Lombard Company which cost $ 3,600
Dr AP $ 3,600
Cr MI $ 3,600

5. On April 15 paid the amount due to Lombard Company in full
Dr AP $ 21,400 ($ 25k – $ 3.6k)
Cr Cash $ 20,972
Cr MI $ 428 (2% x $ 21,400)

(b) Assume that Prophet Co. paid the balance due to Lombard Company on May 4 instead of April 15. Prepare the journal entry to record this payment.
5. On May 4 paid the amount due to Lombard Company in full
Dr AP $ 21,400
Cr Cash $ 21,400