PE 6-2B Purchases transactions

Hoffman Company purchased merchandise on account from a supplier for $65,000, terms 1/10, n/30. Hoffman Company returned $7,500 of the merchandise and received
full credit.

a. If Hoffman Company pays the invoice within the discount period, what is the amount of cash required for the payment?

b. What account is debited by Hoffman Company to record the return?


Answer:
a. $56,925. Purchase of $65,000 less the return of $7,500 less the discount of $575 [($65,000 – $7,500) × 1%].

b. Accounts Payable