Sydney Retailing (buyer) and Troy Wholesalers (seller) enter into the following
ID: 2398793 • Letter: S
Question
Sydney Retailing (buyer) and Troy Wholesalers (seller) enter into the following transactions. May 11 Sydney accepts delivery of $38,500 of merchandise it purchases for resale from Troy: invoice dated May 11 terms 3/10, n/90; FOB shipping point. The goods cost Troy $25,795. Sydney pays $450 cash to Express Shipping for delivery charges on the merchandise. 12 Sydney returns $1,400 of the $38,500 of goods to Troy, who receives them the same day and restores them to its inventory. The returned goods had cost Troy $938. 20 Sydney pays Troy for the amount owed. Troy receives the cash immediately (Both Sydney and Troy use a perpetual inventory system and the gross method.) 1. Prepare journal entries that Sydney Retailing (buyer) records for these three transactions 2. Prepare journal entries that Troy Wholesalers (seller) records for these three transactions.Explanation / Answer
Answers
Amount of Cash Discount:
Total Sales = $ 38,500
Sales Return = $ 1,400
Amount receivables = 38500 – 1400 = $ 37,100
Cash Discount = 37,100 x 3% = $ 1,113
Requirement 1
Date
General Journal
Debit
Credit
May-11
Inventory
$ 38,500.00
Accounts Payable [Troy]
$ 38,500.00
[merchandise purchased]
May-11
Inventory
$ 450.00
Cash
$ 450.00
[freight paid in cash]
May-12
Accounts Payable [Troy]
$ 1,400.00
Inventory
$ 1,400.00
[merchandise returned to Troy]
May-20
Accounts Payable [Troy]
$ 37,100.00
Inventory
$ 1,113.00
Cash
$ 35,987.00
[Cash paid within discount term of 10 days, availing cash discount]
Requirement 2
Date
General Journal
Debit
Credit
May-11
Accounts receivables
$ 38,500.00
Sales Revenue
$ 38,500.00
[merchandise sold]
May-11
Cost of Goods Sold
$ 25,795.00
Inventory
$ 25,795.00
[cost of merchandise sold]
May-12
Sales Return
$ 1,400.00
Accounts receivables
$ 1,400.00
[merchandise retured back]
May-12
Inventory
$ 938.00
Cost of Goods Sold
$ 938.00
[cost of merchandise retured]
May-20
Cash
$ 35,987.00
Sales Discount
$ 1,113.00
Accounts receivables
$ 37,100.00
[Cash received within discount term of 10 days]
Requirement 1
Date
General Journal
Debit
Credit
May-11
Inventory
$ 38,500.00
Accounts Payable [Troy]
$ 38,500.00
[merchandise purchased]
May-11
Inventory
$ 450.00
Cash
$ 450.00
[freight paid in cash]
May-12
Accounts Payable [Troy]
$ 1,400.00
Inventory
$ 1,400.00
[merchandise returned to Troy]
May-20
Accounts Payable [Troy]
$ 37,100.00
Inventory
$ 1,113.00
Cash
$ 35,987.00
[Cash paid within discount term of 10 days, availing cash discount]
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.