Question

5 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. ts 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 $17,420. Sydney pays $520 cash to Express Shipping for delivery charges on the merchandise. 12 Sydney returns $1,300 of the $26,eee 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. ferences Required 1 Required 2 Prepare journal entries that Sydney Retailing (buyer) records for these three transactions. View transaction list Journal entry worksheet < 1 2 3 4 > Sydney accepts delivery of $26,000 of merchandise it purchases for resale from Troy: invoice dated May 11, terms 3/10, n/90, FOB shipping point. The goods cost Troy $17,420. Note: Enter debits before credits General Journal Debit Credit Date May 11 Record entry Clear entry View general journal

Answer 1

1. Journal entries for Sydney Retailing (buyer) :

Date Credit Debit 26,000 May 11. General Journal Merchandise inventory Accounts payable (To record purchase merchandise on credit, terms 3/10, n/90) 26,000 May 11. 520 Merchandise inventory Cash (To record payment of freight charges) 520 May 12. 1,300 Accounts payable Merchandise inventory (To record merchandise returned) 1,300 May 20. 24,700 Accounts payable ( $26,000 - $1,300) Merchandise inventory ($24,700 X 3%) Cash ($24,700 - $741) (To record payment for merchandise within discount period) 741 23,959

2. Journal entries for Troy Wholesalers (Seller) :

Date Credit Debit 26,000 May 11. General Journal Accounts receivable Sales (To record merchandise sold for credit, terms 3/10, n/90) 26,000 May 11. 17,420 Cost of goods sold Merchandise inventory (To record cost of merchandise sold) 17,420 May 12. 1,300 Sales returns and allowances Accounts receivable (To record merchandise returned from May 11 sale) 1,300 871 May 12. Merchandise inventory Cost of goods sold (To record returned merchandise added back to inventory) 871 May 20. 23,959 741 Cash Sales discounts Accounts receivable (Received payment on may 11 sale less discount) 24,700