Jack's Online Service on April 30 has the following account balances:
$$\begin{array} {| l | r| }
\hline\text { Sales } & \$ 25,000 \
\hline \text { Sales Returns and Allowances } & 5,000 \
\hline \text { Purchases } & 20,000 \
\hline \text { Freight-In } & 1,000 \
\hline \text { Purchases Returns and Allow. } & 2,000 \
\hline \text { Purchases Discounts } & ? ? ? \
\hline
\end{array}$$
If net purchases for the period are $15,000,what is the amount in the Purchases Discounts account?

Question

Jack's Online Service on April 30 has the following account balances:
$$\begin{array} {| l | r| } 
\hline\text { Sales } & \$ 25,000 \
\hline \text { Sales Returns and Allowances } & 5,000 \
\hline \text { Purchases } & 20,000 \
\hline \text { Freight-In } & 1,000 \
\hline \text { Purchases Returns and Allow. } & 2,000 \
\hline \text { Purchases Discounts } & ? ? ? \
\hline
\end{array}$$
If net purchases for the period are $15,000,what is the amount in the Purchases Discounts account?

Quizplus · Accepted Answer

Net purchases are calculated as Purchases - Purchases Returns and Allowances - Purchases Discounts. Given net purchases are $15,000, Purchases are $20,000, and Purchases Returns and Allowances are $2,000, the Purchases Discounts must be $3,000 to satisfy the equation: $20,000 - $2,000 - Purchases Discounts = $15,000.

Jack's Online Service on April 30 Has the Following Account