Question

Required information [The following information applies to the questions displayed below.) 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 ii) terms 5/10, 1/90; FOB shipping point. The goods coat Troy $30,000. Sydney pays $390 cash to Express Shipping for delivery charges on the merchandise. May 12 Sydney returns $1,900 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 $1,425. May 20 Sydney paye Troy for the amount owed. Troy receives the cash immediately. (Both Sydney and Troy use a perpetual inventory system and the net method.) 2. Prepare journal entries that Troy Wholesalers records for these transactions View transaction list Journal entry worksheet 2 3 4 5 Record the merchandise sold on account. Note: Enter debits before credits Date General Journal Debit Credit May 11 < Prev 15 of 24 !! Next >

Answer 1

Solution prepare Tournal Entries that Troy Wholesalers records for these transactions Journal Entries Date General Journal Debit Credit May $40000 $40000 Accounts Receivable aic Sales Revenue aic (To record the Merchandise sold - on account) Mayli $30000 Cost of goods sold alc Inventory arc (Torecord the cost of goods Sold to the customers) $30000 May12 $1900 $1900 Sales Returns and Allowances aid Accounts Receivable alc (To record the goods returned by the customers) Inventory aic Cost of goods soldal (To record the cost of goods returned) May 12 $1425 $1425 Mayzo $36957 $1143 Cash alc Sales discount aic Accounts Receivable ( Togecord the collection of dues received from the customers $38100

loo Working Notes - O Sales discounts allowed = ($ 40000 – $1909) X3 = $1143 Therefore, Sydney (buyer) will get Sales discount of $1143 as payment of the dues made with in next lodays of th Sale made by the tooy (selles).

© since, there is FOB shipping point under which Buyer has to pay and record the shipping charges. So, Tooy (seles) will not - require to recognise Such Shipping changes in his books of account