Question

(15 Points) Eleanor's Sports Shop (buyer) accepts $40,000 worth of fishing tackle from Maria's Wholesale Tackle. The invoice reads 3/10, n/90, FOB Shipping Point. The goods cost Maria's Wholesale Tackle $30,000. Both Eleanor and Maria use the perpetual inventory system and the gross method. Eleanor pays Fed Ex $345 cash to deliver the fishing tackle. Eleanor returns $1,400 of the $40,000 of fishing tackle to Maria's. The returned goods had cost Maria $1,050. The goods were returned within the discount period. Prepare Journal Entries for Eleanor's for these transactions. Prepare as if Eleanor paid within the discount period and as if Eleanor did not pay within the discount period. Prepare Journal Entries for Maria's for these transactions. Prepare as if Eleanor paid within the discount period and as if Eleanor did not pay within the discount period.

Answer 1

Journal Entries - Eleaner's Books- Buyer- Prepetual Inventory
S. No.	Account tittle	Debit	Credit
a.	Merchandised Inventory	$40,000.00
	Account Payablee		$40,000.00
	TO Record Good Purchase
b.	Merchandised Inventory	$345.00
	Cash		$345.00
	TO Record Freight paid
c.	Account Payable	$1,400.00
	Merchandised Inventory		$1,400.00
	To Record return of Goods
d. (1)	Account Payable (40000-1400)	$38,600.00
	Merchandised Inventory (38600*3%)		$1,158.00
	Cash (bf)		$37,442.00
	Payment made with in discount period
d. (2)	Account Payable (40000-1400)	$38,600.00
	Cash (bf)		$38,600.00
	Payment made after discount period
Journal Entries - Maria'ss Books- Buyer- Prepetual Inventory
S. No.	Account tittle	Debit	Credit
a.	Accoutn Receivable	$40,000.00
	Sales		$40,000.00
	To Record Sales made on account
	Cost of Goods Sold	$30,000.00
	Merchanides Inventory		$30,000.00
	TO Record Cost of Goods Sold
b.	Sales Return	$1,400.00
	Accoutn Receivable		$1,400.00
	To Record sales return
	Mercahandised Inventor	$1,050.00
	Cost of Goods Sold		$1,050.00
	To Record return of Inventory
c.	Cash	$37,442.00
	Discount on sales ( 38600*3%)	$1,158.00
	Account receivable (40000-1400)		$38,600.00
	Payment made within discount period
c.	Cash	$38,600.00
	Account receivable (40000-1400)		$38,600.00
	Payment made afterdiscount period