Question

07 Exercise 4-7 Recording sales, purchases, shipping, and returns-buyer and seller LO P1, P2 Sydney Retailing (buyer) and Troy Wholesalers (seller) enter into the following transactions. ints May 11 Sydney accepts delivery of $26,880 of merchandise it purchases for resale from Troy: invoice dated May 11, terms 3/10, n/90, FOB shipping point. The goods cost Troy $17,428. Sydney pays $528 cash to Express Shipping for delivery charges on the merchandise 12 Sydney returns $1,300 of the $26,000 of goods to Troy, who receives them the same day and restores them to its inventory. The returned goods had cost Troy $871. 20 Sydney pays Troy for the amount owed. Troy receives the cash immediately. eBook (Both Sydney and Troy use a perpetual Inventory system and the gross method.) Hint 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. Ask Complete this question by entering your answers in the tabs below. References Required 1 Required 2 Prepare journal entries that Troy Wholesalers (seller) records for these three transactions. View transaction list Journal entry worksheet < 1 2 3 5 Record the merchandise sold on account. Note: Enter debits before credits General Journal Debit Credit Date May 11 Record entry Clear entry View general journal

Answer 1

Journal entries in the books of buyer
Date	General Journal	Debit	Credit
11-May	Merchandise inventory	$26,000
	Accounts payable		$26,000
	(To record inventory purchased on account)
11-May	Merchandise inventory	$520
	Cash		$520
	(To record delivery charges paid)
12-May	Accounts payable	$1,300
	Merchandise inventory		$1,300
	(To record goods returned)
20-May	Accounts payable (26000-1300)	$24,700
	Merchandise inventory (24700*3%)		$741
	Cash (24700-741)		$23,959
	(To record cash paid to supplier)
Journal entries in the books of seller
Date	General Journal	Debit	Credit
11-May	Accounts receivable	$26,000
	Sales revenue		$26,000
	(To record sale of goods on account)
11-May	Cost of goods sold	$17,420
	Merchandise inventory		$17,420
	(To record cost of goods sold)
12-May	Sales return and allowance	$1,300
	Accounts receivable		$1,300
	(To record goods returned)
12-May	Merchandise inventory	$871
	Cost of goods sold		$871
	(To record goods returned)
20-May	Cash (24700-741)	$23,959
	Sales discount (24700*3%)	$741
	Accounts receivable (26000-1300)		$24,700
	(To record cash collected from customer)