Purchase of merchandise



Q10. Purchase of merchandise
Entity A purchased 100 units of merchandise at $8,300 on account.
Prepare a journal entry to record this transaction.

A10. Purchasing on account is recorded by posting accounts payable on the credit side.

Journal entry:

  Debit Credit
Merchandise 8,300  
     Accounts payable   8,300

[Note]
1. Increase in merchandise (asset): debit
2. Increase in accounts payable (liability): credit

[Exercise]
Entity B purchased 150 units of merchandise at $32,000 and issued a promissory note for the full purchase price.

  Debit Credit
Merchandise 32,000  
     Notes payable   32,000

[Note]
1. Increase in merchandise (asset): debit
2. Increase in notes payable (liability): credit

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