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During January 2016, Wells Corporation purchased $200,000 of inventory; they paid one-fourth in cash, and signed a note for the remaining balance. This transaction will be recorded as:

Respuesta :

Answer:

Inventory                        $200,000    

Cash                                                      $50,000

Notes payable                                      $150,000

Explanation:

Data provided in the question:

Cost of the inventory purchased = $200,000

Amount paid in cash =  one-fourth

= one-fourth of $200,000

= $50,000

For the remaining balance signed a note i.e = $200,000 - $50,000

= $150,000

Now,

This transaction will be recorded as:

Inventory                        $200,000    

Cash                                                      $50,000

Notes payable                                      $150,000

chilljain33

The correct statement will be that the journal entries of purchase of inventory will have inventory as debited and a credit in the cash accounts and bills payables accounts as on such date.

The journal entries and their effects with narration of the transaction and the event along with appropriate amounts are attached in the image below, please refer to the same.

Journal entries

  • Journal entries are referred to as the recording of financial transactions of a business in the books of the organization in the chronological order of their appearance.

  • In the books of Wells Corp. there will be a debit in the inventories account for $200,000 and a credit in the cash accounts for $50000 and the bills payables account for $150,000.

Hence, the appropriate effects of the purchase of inventory by Wells Corp. in the form of journal entries are as explained above and an image of the same is attached herewith.

Learn more about Journal Entries here:

https://brainly.com/question/17439126

Ver imagen chilljain33

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