The balance in Locksome Company's accounts payable account at December 31,2014,was $1,100,000 before considering the following information:
•Goods shipped FOB shipping point on December 20,2014,from a vendor to Locksome were lost in transit.The invoice cost of $20,000 was not recorded by Locksome.On January 6,2015,Locksome filed a $20,000 claim against the common carrier.
•On December 27,2014,a vendor authorized Locksome to return,for full credit,goods shipped and billed at $35,000 on December 2,2014.The returned goods were shipped by Locksome on December 27,2014.A $35,000 credit memo was received and recorded by Locksome on January 6,2015.
What amount should Locksome report as accounts payable in its December 31,2014,balance sheet?

Question

Quizplus · Accepted Answer

The balance in accounts payable should be $1,085,000. The $20,000 loss in transit should be recorded as a debit to loss from purchase commitments and a credit to accounts payable. The $35,000 return should be recorded as a debit to accounts payable and a credit to purchases.

The Balance in Locksome Company's Accounts Payable Account at December