Final Exam Study Guide

Purchase a computer on account for 1500 on march 5 at

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purchase a computer on account for $1500 on March 5, at the time of the transaction we record the entry as March 5 Equipment-Computer (debit) $1500 Accounts Payable (credit) $1500 later in say the month, we may make a payment to this account, we need to "adjust" these accounts to show the current state of them. Say on March 20, we make a payment of $500 on the account, we have to show this adjustment by doing the following adjusting entries. March 20 Accounts Payable (debit) $500 Cash (credit) $500 This adjusting entry reflects what we now owe to the account payable, with out the adjusting entry, our books would still be showing that we owe the full amount even though we paid part of it. 4. What is merchandise inventory? (what type of account?) Merchandise inventory is the goods owned by the business organization which are held for sale to the consumers. The current asset which reports the cost of a retailer's, wholesaler's, or distributor's goods purchased to be resold, which have not yet been sold as of the balance sheet date.
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