(Both Sydney and Troy use a perpetual inventory system and the gross method.) 1.
ID: 341748 • Letter: #
Question
(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.
Sydney accepts delivery of $32,000 of merchandise it purchases for resale from Troy: invoice dated May 11; terms 3/10, n/90; FOB shipping point. The goods cost Troy $21,440.
Sydney pays $495 cash to Express Shipping for delivery charges on the merchandise.
Sydney returns $1,400 of the $32,000 of goods to Troy, who receives them the same day and restores them to its inventory. The returned goods had cost Troy $938.
Sydney pays Troy for the amount owed. Troy receives the cash immediately.
Record the merchandise sold on account.
Record the cost of goods sold.
Record the sales return.
Record the cost of sales return.
Record the cash collected for credit sales.
May 11 Sydney accepts delivery of $32,000 of merchandise it purchases for resale from Troy: invoice dated May 11; terms 3/10, n/90; FOB shipping point. The goods cost Troy $21,440. Sydney pays $495 cash to Express Shipping for delivery charges on the merchandise. 12 Sydney returns $1,400 of the $32,000 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
Sydney Retailing(buyer) Date Accounting titles & Explanations Debit Credit 11-May Merchandise inventory 32,000 Accounts payable 32,000 Merchandise inventory 495 cash 495 12-May Accounts payable 1,400 Merchandise inventory 1,400 20-May Accounts payable (32000-1400) 30600 Merchandise invnetory 918 Cash (30600*97%) 29682 Troy wholesalers (seller) Date Accounting titles & Explanations Debit Credit 11-May Accounts receivable 32,000 sales 32,000 cost of goods sold 21,440 Merchandise inventory 21,440 12-May Sales return & allowance 1,400 Accounts receivabl 1,400 merchandise inventory 938 cost of goods sold 938 20-May Cash 29682 Sales discount 918 account receivable 30,600
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