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

1
Date	General Journal	Debit	Credit
May 11	Purchases	40000
	Accounts Payable		40000
May 11	Freight-in	345
	Cash		345
May 12	Accounts Payable	1400
	Purchase returns		1400
May 20	Accounts Payable	38600		=40000-1400
	Purchase discount		1158	=38600*3%
	Cash		37442
2
Date	General Journal	Debit	Credit
May 11	Accounts Receivable	40000
	Sales		40000
May 12	Sales return and Allowances	1400
	Accounts Receivable		1400
May 20	Cash	37442
	Sales discounts	1158		=38600*3%
	Accounts Receivable		38600