Podcast Beta
Questions and Answers
What was the initial amount credited to trade payable Eugene on January 6?
What amount was debited to trade payable Eugene on January 12?
How much cash did the business actually pay to settle the account with trade payable Eugene on January 29?
What was the nature of the entry made on January 31?
Signup and view all the answers
What type of account does trade payable represent?
Signup and view all the answers
What is the balance carried forward in the Trade Payable Ledger account on February 1?
Signup and view all the answers
What does the 'Dr' in the Trade Payable Ledger account represent?
Signup and view all the answers
How much cash was paid to supplier Eugene on January 29?
Signup and view all the answers
Which transaction indicates a return of goods purchased on credit?
Signup and view all the answers
Why was the trade discount of 10% not recorded in the ledger?
Signup and view all the answers
What type of account does the Trade Payable Ledger represent?
Signup and view all the answers
How is the amount of $100 on January 31 recorded?
Signup and view all the answers
What percentage of the inventory cost was recorded for the January 6 purchase?
Signup and view all the answers
Study Notes
Trade Payable Ledger Account
- Trade Payable (TP) Ledger Account - A record of transactions with a specific supplier, in this case, 'Eugene'.
-
TP Account Columns:
- Debit (Dr): Amount the business pays the supplier.
- Credit (Cr): Amount the business owes the supplier (liability).
- Balance (Bal): Remaining balance owed.
- Source: Documents supporting the transaction (Invoice, Credit Note, Payment Voucher, Debit Note).
- Date: The date of the transaction.
-
TP Account Particulars:
- Inventory: Includes purchases and returns of goods.
- Discount Received: Reduction in the amount payable to the supplier.
- Cash in Hand/Cash at Bank: Indicates cash or bank transfers used to settle the debt.
Trade Payable Account Example: Eugene
- Beginning Balance (Jan 1): $7,500 owed to Eugene.
- Purchases (Jan 6): Business buys goods worth 4,500(904,500 (90% of 4,500(905000, after 10% trade discount).
- Returns (Jan 12): Business returns goods previously bought for 270(90270 (90% of 270(90300, after trade discount).
- Payment (Jan 29): 6000owingtoEugeneissettledwitha6000 owing to Eugene is settled with a 6000owingtoEugeneissettledwitha120 cash discount.
- Undercharge (Jan 31): Inventory previously purchased was underpriced, resulting in an increase of $100 in what is owed.
- Ending Balance (Feb 1): $5,830 owed to Eugene.
Trade Payable
-
Definition: A trade payable is a supplier whom the business purchased goods or services on credit from.
-
Nature: A liability, represented on a balance sheet as a credit.
-
Journal Entries: The following are examples of journal entries for trade payable transactions:
-
Purchase on Credit:
- Debit: Inventory (asset increase)
- Credit: Trade Payable (liability increase)
-
Returns to Supplier:
- Debit: Trade Payable (liability decrease)
- Credit: Inventory (asset decrease)
-
Cash Payment:
- Debit: Trade Payable (liability decrease)
- Credit: Cash in Hand/Cash at Bank (asset decrease)
- Credit: Discount Received (revenue increase)
-
Undercharge Adjustment:
- Debit: Inventory (asset increase)
- Credit: Trade Payable (liability increase)
-
Purchase on Credit:
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
Related Documents
Description
This quiz explores the features and functionalities of a Trade Payable Ledger Account, specifically focusing on transactions with the supplier, Eugene. Key concepts include debits, credits, balance calculations, and supporting documents such as invoices and payment vouchers.
