Question

Unit 5 Journal Buyer and Seller

This assessment addresses the following course objective(s):

Record various business transactions in accordance with generally accepted accounting principles

In this assignment, we will look at various merchant transactions from the buyer and seller's perspective.

Buy and Seller Entries Franklin Retailing (buyer) and Sandord Wholesalers (seller) enter into the following transactions October 15-Feb Franklin accepts delivery of $36,000 of merchandise it purchases for resale from Sanford: invoice dated October 15, terms 3/10, n/90, FOB shipping point. The goods cost Sanford $24. 120. Franklin pays $460 cash to Speedy Shipping for delivery charges on the merchandise. 19-Feb Franklin returns $1,200 of the $36,000 of goods to Sanford, who receives them the same day and restores them to its inventory. The returned goods had cost Sanford $804. 25-Feb Franklin pays Sanford for the amount owed. Sanford receives the cash immediately (Both Franklin and Sanford use a perpetual inventory system and the gross method.) Instructions 1. Prepare journal entries that Franklin Retailing (buyer) records for these three transactions. No Date General Journal Debit Credit 2. Prepare journal entries that Sanford Wholesalers (seller) records for these three transactions. No Date General Journal Debit Credit

Answer 1

1. Journal entries in Franklin Retailing (Buyer)

No	Date	General Ledger	Debit	Credit
1	15-Feb	Inventory	36000
		Freight-in	460
		Cash		460
		Accounts Payable		36000
		(Purchase $36000 inventory, term F.O.B shipping point and shipping charge)
2	19-Feb	Accounts Payable	1200
		Inventory		1200
		(Purchase return worth $1200)
3	25-Feb	Accounts Payable	34800
		Inventory		1044
		Cash		33756
		(Paid to seller with 2% discount received)

2. Journal entries in Sandord Wholesaler (Seller)

No	Date	General Ledger	Debit	Credit
1	15-Oct	Accounts Receivable	36000
		Sales		36000
		(Sales $ 36000 to Franklin Retailing)
	15-Oct	Cost of good sold	24120
		Inventory		24120
		(Cost of goods $ 24120)
2	19-Feb	Sales	1200
		Accounts Receivable		1200
		(Sales return worth $1200)
	19-Feb	Inventory	804
		Cost of good sold		804
		(Inventory cost $804)
3	25-Feb	Cash	33756
		Sales Discount	1044
		Accounts Receivable		34800
		(Cash received with 2% discount allowed)