Question

On May 11, Sydney Co. accepts delivery of $40,000 of merchandise it purchases for resale from Troy Corporation. With the merchandise is an invoice dated May 11, with terms of 3/10, 1/90, FOB shipping point. The goods cost Troy $30,000. When the goods are delivered, Sydney pays $345 to Express Shipping for delivery charges on the merchandise. On May 12, Sydney returns $1,400 of goods to Troy, who receives them one day later and restores them to inventory. The returned goods had cost Troy $800. On May 20, Sydney mails a check to Troy Corporation for the amount owed. Troy receives it the following day Prepare journal entries to record each of the merchandising transactions assuming that the periodic inventory system is used by both the buyer and the seller. Entries for Sydney Company (BUYER):

Answer 1

		DEBIT	CREDIT
May-11	MERCHANDISE SUPPLIES ACCOUNT	40000
	TO TROY CORPORATION		40000
	PURCHASE OF MERCHANDISE FROM TROY CORPORATION ON ACCOUNT
May-11	DELIVERY CAHRGES ACCOUNT	345
	TO EXPRESS SHIPPING ACCOUNT		345
	BEING THE SHIPPING CHARGES PAYABLE FOR PURCHASE OF MERCHANDISE FROM TROY CORPORATION ON ACCOUNT
	EXPRESS SHIPPING ACCOUNT	345
	TO CASH ACCOUNT		345
	BEING THE SHIPPING CHARGES PAID
May-12	TROY CORPORATION	1400
	TO MERCHANDISE SUPPLIES RETURN ACCOUNT		1400
	BEING THE GOODS RETURNED TO TROY CORPORATION
May-21	TROY CORPORATION	38600
	TO DISCOUNT ACCOUNT		1158	38600*3/100
	TO CASH/BANK ACCOUNT		37442
	BEING THE AMOUNT PAID TO TROY CORPORATION FOR THE AMOUNT DUE OF 38600 I.E. 40000 LESS AFTER RETURN 1400, AFTER 3% DISCOUNT AS THE PAYMENT MADE WITHIN 10 DAYS)