Question

Check 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. May 11 Sydney accepts delivery of $31,500 of merchandise it purchases for resale from Troy! Invoice dated May 11, terms 3/10, n/90, POB shipping point. The goods cost Troy $21,105. Sydney pays $500 cash to Express Shipping for delivery charges on the merchandise. 12 Sydney returns $1,100 of the $31,500 of goods to Troy, who receives then the same day and restores then to its inventory. The returned goods had cost Troy $737. 20 Sydney pays Troy for the amount owed. Troy receives the cash immediately, (Both Sydney and Troy use a perpetual 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 Required 1 Required 2 Prepare journal entries that Sydney Retailing (buyer) records for these three transactions. View transaction list Journal entry worksheet Sydney accepts delivery of $31,500 of merchandise it purchases for resale from Troy: Invoice dated May 11, terms 3/10, n/90, FOB shipping point. The + Trẻ E < Prev 4 of 5 Next >

Answer 1

In the books of Sydney (buyer):

Date	Account title and explanation	Debit	Credit
May 11	Merchandise inventory	$31,500
	Accounts payable		$31,500
	[Purchase of inventory on account]
	Merchandise inventory	$500
	Cash		$500
	[Paid for freight]
May 12	Accounts payable	$1,100
	Merchandise inventory		$100
	[Purchase returns]
May 20	Accounts payable [31,500-1,100]	$30,400
	Merchandise inventory [30,400 x 3%]		$912
	Cash		$29,488
	[Paid for accounts payable]

In the books of Troy(seller):

Date	Account title and explanation	Debit	Credit
May 11	Accounts receivable	$31,500
	Sales revenue		$31,500
	[Sales on account]
	Cost of goods sold	$21,105
	Merchandise inventory		$21,105
	[Cost of goods sold]
May 12	Sales returns and allowance	$1,100
	Accounts receivable		$100
	[Sales returns]
	Merchandise inventory	$737
	Cost of goods sold		$737
	[Cost of sales returned]
May 20	Cash	$29,488
	Sales discount [30,400 x 3%]	$912
	Accounts receivable [31,500-1,100]		$30,400
	[Collections from customers]