Question

Sydney Retailing (buyer) and Troy Wholesalers (seller) enter into the following transactions. May 11 Sydney accepts delivery of $40,000 of merchandise it purchases for resale from Troy: invoice dated May 11, terms 3/10, n/90, FOB shipping point. The goods cost Troy $30,000. Sydney pays $345 cash to Express Shipping for delivery charges on the merchandise. 12 Sydney returns $1,400 of the $40,000 of goods to Troy, who receives them the same day and restores them to its inventory. The returned goods had cost Troy $1,050. 20 Sydney pays Troy for the amount owed. Troy receives the cash immediately. Assume that both buyer and seller use a periodic 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. Complete this question by entering your answers in the tabs below.

Answer 1

the credit Debit Date May II Sydney Retailing (buyer) General Journal Merchandise inventory Accounts payable (To record merchandise purchases) $ 40,000 $ 40,000 May 1 а ) & 345 & 345 Merchandise inventory Cash (to record cash paid for delivery, charges) & 1,400 & 1400 Maya Accounts payable Merchandise inventory (to record returns of goods) $ 38, 600 May 20 Accounts payable Cash $ 1,158 Merchandise inventory $ 37,442 170 record early payment disco Calculations May 20 Accounts payable $ 40,000 $ 1,400 $ 38,600 unt) Early payment discount ($ 40,000 - $ 1,400) x 34 $ 38,600 X 3°/. $ 1,158

Troy Date Wholesalers (seller) General Journal Accounts receivable Credit May!! Debit $ 40,000 Sales $ 40,000 (to record accounts receivable) Mayli $ 30,000 Cost of goods sold Merchandise inventory (To record cost of goods sold) & 30,000 $ 1,400 Mayla Sales returns and allowance Accounts receivable (To record sales return & allowar nee) $ 1,400 $ 1,050 Mayla Merchandise inventores Cost of goods sold (to record returned goods Cost) $ 1,050 & 38,600 May 20 Cash $ 37,442 Sales discounts $ 1,150 Accounts receivable (To record sales discount) Calculations Accounts receivable $ 40,000 - $ 1,400 $ 38,600 Sales discount ($ 40,000 - $1,400) x 3% $ 38,600 X 3% $ 1158