On May 11, Sydney Co. accepts delivery of $29,000 of merchandise it purchases fo
ID: 2424808 • Letter: O
Question
On May 11, Sydney Co. accepts delivery of $29,000 of merchandise it purchases for resale from Troy Corporation. With the merchandise is an invoice dated May 11, with terms of 3/10, n/90, FOB shipping point. The goods cost Troy $19,430. When the goods are delivered, Sydney pays $535 to Express Shipping for delivery charges on the merchandise. On May 12, Sydney returns $2,140 of goods to Troy, who receives them one day later and restores them to inventory. The returned goods had cost Troy $1,434. On May 20, Sydney mails a check to Troy Corporation for the amount owed. Troy receives it the following day. (Both Sydney and Troy use a perpetual inventory system.)
1.
Prepare journal entries that Sydney Co. records for these transactions.
Entry #1: On May 11, Sydney Co. accepts delivery of $29,000 of merchandise it purchases for resale from Troy Corporation. With the merchandise is an invoice dated May 11, with terms of 3/10, n/90, FOB shipping point. The goods cost Troy $19,430.
Entry#2: When the goods are delivered, Sydney pays $535 to Express Shipping for delivery charges on the merchandise.
Entry#3: On May 12, Sydney returns $2,140 of goods to Troy, who receives them one day later and restores them to inventory. The returned goods had cost Troy $1,434
Entry#4: On May 20, Sydney mails a check to Troy Corporation for the amount owed. Troy receives it the following day.
2.
Prepare journal entries that Troy Corporation records for these transactions.
Entry#1: Record the merchandise sold on account.
Enrty#2: Record the cost of goods sold
Enrty#3: Record the sales return.
Entry#4:Record the cost of sales return.
Entry #5: Record the cash collected for credit sales.
On May 11, Sydney Co. accepts delivery of $29,000 of merchandise it purchases for resale from Troy Corporation. With the merchandise is an invoice dated May 11, with terms of 3/10, n/90, FOB shipping point. The goods cost Troy $19,430. When the goods are delivered, Sydney pays $535 to Express Shipping for delivery charges on the merchandise. On May 12, Sydney returns $2,140 of goods to Troy, who receives them one day later and restores them to inventory. The returned goods had cost Troy $1,434. On May 20, Sydney mails a check to Troy Corporation for the amount owed. Troy receives it the following day. (Both Sydney and Troy use a perpetual inventory system.)
Explanation / Answer
Journal entries
In the books of Sydney Co.
Troy Corporation
Description Debit Credit 1) Merchandise inventory $29,000 To Accounts payable $29,000 2) Merchandise inventory $535 To cash $535 3) Accounts payable $2,140 To Merchandise inventory $2,140 4) Account payable $26,860 To Merchandise inventory $806 To cash 26,504 (29,000 - 2140) 3%Related Questions
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