Preparing journal entries for merchandising activities LO1
Prepare journal entries to record the following merchandising transactions of Sheng Company.
Aug. 1 Purchased merchandise from Arotek Company for $7,500 under credit terms of 1/10, n/30,
invoice dated August 1.
8 Purchased merchandise from Waters Corporation for $5,400 under credit terms of 1/10, n/45,
FOB shipping point, invoice dated August 8. The invoice showed that at Sheng’s request,Waters paid the $140 shipping charges and added that amount to the bill. (Recall: Discounts are not applied to freight and shipping charges.)
12 After negotiations with Waters Corporation concerning problems with the merchandise purchased on August 8, Sheng received a credit memorandum from Waters granting a price reduction of $700.
18 Paid the amount due Waters Corporation for the August 8 purchase less the price reduction granted.
30 Paid Arotek Company the amount due from the August 1 purchase.
Check Aug. 18, Cr. Cash $4,793
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