Sydney Retailing (buyer) and Troy Wholesalers (seller) enter into the following

Question

Sydney Retailing (buyer) and Troy Wholesalers (seller) enter into the following transactions.
  

(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.

May 11 Sydney accepts delivery of $23,500 of merchandise it purchases for resale from Troy: invoice dated May 11; terms 3/10, n/90; FOB shipping point. The goods cost Troy $15,745. Sydney pays $340 cash to Express Shipping for delivery charges on the merchandise. 12 Sydney returns $1,400 of the $23,500 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.

Explanation / Answer

Answer:

1

Prepare journal entries that Sydney Retailing (buyer) records for these three transactions.

Date

General Journal

Debit $

Credit $

11-May

Merchandise Inventory

23500

Accounts payable

23500

11-May

Merchandise Inventory

340

Cash

340

12-May

Accounts payable

1400

Merchandise Inventory

1400

20-May

Accounts payable (23500-1400)

22100

Cash (22100-663)

21437

Merchandise Inventory (22100*3%)

663

___________________________________________________________________
2.

Prepare journal entries that Troy Wholesalers (seller) records for these three transactions.

Date

General Journal

Debit $

Credit $

11-May

Accounts Recivable

23500

Sales

23500

11-May

Cost of goods sold

15745

Merchandise Inventory

15745

12-May

Sales returns and allowance

1400

Accounts Recivable

1400

12-May

Merchandise Inventory

938

Cost of goods sold

938

20-May

Cash

21437

Sales Discount

663

Accounts Recivable

22100

Date

General Journal

Debit $

Credit $

11-May

Merchandise Inventory

23500

Accounts payable

23500

11-May

Merchandise Inventory

340

Cash

340

12-May

Accounts payable

1400

Merchandise Inventory

1400

20-May

Accounts payable (23500-1400)

22100

Cash (22100-663)

21437

Merchandise Inventory (22100*3%)

663

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