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1. Your accounts payable system generates automated journal entries each time an invoice is recorded.
2. Each vendor has usual terms included in the vendor master file, including Taxpayer IDC, Name<paying Address, Discount Terms, etc.
3. You have received an invoice from Vendor A for one widget (an item of Machinery & Equipment) in the amount of $34,175.36 which agrees with the appropriate purchase order. You also have a receiving report from your Receiving Department that indicates that you have received the widget in question in good order. You normally purchase manufacturing supplies from this vendor.
4. This invoice offers the normal discount of $341.75 if paid within 10 days.
5. Discounts are normally recorded in a Discounts Earned account in the Other Income & Expense section of the Chart of Accounts.
6. You have paid the invoice within the discount period.
7. Prepare all related journal entries in journal form for this purchases and the related payment.
How could each decision affect the company's cash flows? Ethically, how could the purchase cost be allocated? Who will be affected by the decision?
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