On 4 October 2020, Tumusiime Stationers purchased merchandise on account from Office Suppliers for Sh 62,000, with terms of 1/10, n/30. During the discount period, Tumusiime returned some merchandise (on 5 October) and paid Sh 59,400 as payment in full (on 14 October). Required:

By dragging and dropping the answers given below;

(a) Prepare the journal entries that Tumusiime Stationers made to record the full payment on 14/10/2020

Date

Account

Ref.

Dr (Sh)

Cr (Sh)

14/10/2020

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(iii)

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(b) Prepare the journal entries that Office Suppliers made to record the full payment on 14/10/2020

Date

Account

Ref.

Dr (Sh)

Cr (Sh)

14/10/2020

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(iii)

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Office suppliers 60,000 Cash 59,400 Purchases discounts 600 Purchase returns and allowances 62,000 2,0000 Cash Tumusiime Stationers Sales Sales returns and allowances Purchases Purchases returns and allowances
Cash 59,400 Sales Discounts allowed 600 Tumusiime Stationers 60,000 2,000 Office suppliers Sales Sales returns and allowances Cash Purchases Purchases returns and allowances Purchase discounts

Tumusiime Stationers

a) Journal Entries on 14/10/2020:

Debit Office Suppliers Sh 60,000

Credit Cash Account Sh 59,400

Credit Purchase Discount Sh 600

To record the payment in full on account.

Office Suppliers

b) Journal Entries on 14/10/2020:

Debit Cash Account Sh 59,400

Debit Sales Discount Sh 600

Credit Tumusiime Stationers Sh 60,000

Explanation:

Other Journal entries made by Tumusiime and Office Suppliers are:

Tumusiime:

October 4, 2020:

Debit Inventory Sh 62,000

Credit Office Suppliers Sh 62,000

To record the purchase of goods on account,  terms of 1/10, n/30.

Debit Office Suppliers Sh 2,000

Credit Inventory  Sh 2,000

To record the return of goods on account.

Office Suppliers:

October 4, 2020:

Debit Tumusiime Stationers $62,000

Credit Sales Revenue $62,000

To record the sale of goods on account,  terms of 1/10, n/30.

Debit Sales Returns $2,000

Credit Tumusiime Stationers $2,000

To record the return of goods on account.

b) Calculations:

To determine the amount of returns, we first calculate the balance before the discount.  Since the discount equals 1%, it implies that Sh 59,400 = 99% (100 - 1%).  Therefore, 100% of Sh 59,400 = Sh 60,000 (59,400/99%).  This shows that Sh 2,000 (Sh 62,000 - 60,000) was the amount of returns made.

the answer to this question would be shared investment