Question

quired information he following information applies to the questions displayed below he transactions listed below are typical of those involving Amalgamated Textiles and American Fashions. Amalgamated a wholesale merchandiser and American Fashions is a retail merchandiser. Assume all sales of merchandise from malgamated to American Fashions are made with terms n/60, and the two companies use perpetual inventory systems ssume the following transactions between the two companies occurred in the order listed during the year ended December 31 a. Amalgamated sold merchandise to American Fashions at a selling price of $305,000. The merchandise had cost Amalgamated $205,000 Two days later, American Fashions returned goods that Had been sold to the company at a price of $34,500 and complained to Amalgamated that some of the remaining merchandise differed from what American Fashions had ordered. Amalgamated agreed to give an allowance of $7,000 to American Fashions. The goods returned by American b. Fashions had cost Amalgamated $22,770 C Just three days later, American Fashions paid Amalgamated, which settled all amounts owed Prepare the journal entries that Amalgamated Textiles would record. TIP: When using a perpetual inventory system, the seller always makes two journal entries when goods are sold. (If no entry is required for a transaction/event, select "No Journal Entry Required in the first account field.) Prev 4 of 15 Next>

Answer 1

a(1)	Accounts Receivable	305000
	Sales revenue		305000
a(2)	Cost of goods sold	205000
	Inventory		205000
b(1)	Sales return and allowances	41500		=34500+7000
	Accounts Receivable		41500
b(2)	Inventory	22770
	Cost of goods sold		22770
c	Cash	263500		=305000-41500
	Accounts Receivable		263500
Note: Inventory denotes Merchandise inventory