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Billy Bob's B-B-Q paid cash to Pork Distributors. 418 covering Purchase Innoice No.1921 for 440 less a 5% discount. 22.00. What is the journal entry for Billy Bob's B-B-Q to record this transaction? Debit Accounts Payable/Pork Distributors, 418 credit Cash. 418. Debit Accounts Payable/Pork Distributors. 440 credit Cash, 440. Debit Accounts Payable/Pork Distributors, 440 credit Purchases Discount 22 and credit Cash 418. Debit Purchases Discount 22 and debit Cash 418 credit Accounts Payable/Pork Distributors 440.

Question

Billy Bob's B-B-Q paid cash to Pork Distributors. 418 covering Purchase Innoice No.1921 for 440 less a 5%  discount. 22.00. What is the journal entry for Billy Bob's B-B-Q to record this
transaction?
Debit Accounts Payable/Pork Distributors, 418 credit Cash. 418.
Debit Accounts Payable/Pork Distributors. 440 credit Cash, 440.
Debit Accounts Payable/Pork Distributors, 440 credit Purchases Discount 22 and credit Cash 418.
Debit Purchases Discount 22 and debit Cash 418 credit Accounts Payable/Pork Distributors 440.

Billy Bob's B-B-Q paid cash to Pork Distributors. 418 covering Purchase Innoice No.1921 for 440 less a 5% discount. 22.00. What is the journal entry for Billy Bob's B-B-Q to record this transaction? Debit Accounts Payable/Pork Distributors, 418 credit Cash. 418. Debit Accounts Payable/Pork Distributors. 440 credit Cash, 440. Debit Accounts Payable/Pork Distributors, 440 credit Purchases Discount 22 and credit Cash 418. Debit Purchases Discount 22 and debit Cash 418 credit Accounts Payable/Pork Distributors 440.

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TobyProfessional · Tutor for 6 years

Answer

<br /><br />The transaction detailed in the question describes Billy Bob's B-B-Q paying off part of its Accounts Payable to Pork Distributors. Given the cash being paid is $418 including a 5% discount of the original invoice amount $440, meaning the full invoice price is indeed worked off, we need an accounting entry that both signifies the payment made as well as accounts for the discount as a form of savings. <br /><br />Thus, the correct journal entry would be:<br /><br />Debit Accounts Payable/ Pork Distributors for $440 , indicating that the total amount owed to Pork Distributors has been paid off and thus the liability decreases;<br /><br />Credit Purchase Discounts for $22, accounting for the discount perceived due to early payment;<br /><br />and Credit Cash for $418, indicating payment of cash from Billy Bob’s B-B-Q to Pork Distributors, hence reducing the asset.<br /><br />All three records together symbolize the cash paid out as well as the discount transaction posting, which matches with option (c). None of the other answers give this thoroughness.<br /> <br />Hence, the accurate way to record this transaction is, <br /><br />(c) Debit Accounts Payable/Pork Distributors, $440; credit Purchases Discount $22 and credit Cash $418.<br />
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