Business, 16.10.2020 14:01 amortalstardev

Sydney Retailing (buyer) and Troy Wholesalers (seller) enter into the following transactions. May 11 Sydney accepts delivery of $25,000 of merchandise it purchases for resale from Troy: invoice dated. May 11, terms 3/10, n/90, FOB shipping point. The goods cost Troy $16,750. Sydney pays $410 cash to Express Shipping for delivery charges on the merchandise.
12 Sydney returns $1,400 of the $25,000 of goods to Troy, who receives them the same day and restores them to its inventory. The returned goods had cost Troy $938.
20 Sydney pays Troy for the amount owed. Troy receives the cash immediately.

Required:
a. Prepare journal entries that Sydney Retailing (buyer) records for these three transactions.
b. Prepare journal entries that Troy Wholesalers (seller) records for these three transactions.

Answers: 2

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Answers

Answer from: gonzalesalexiaouv1bg

Buyer

May 11Dr Merchandise inventory25,000

Cr Account payable 25,000

Dr Merchandise inventory410

Cr Cash 410

May 12Dr Account payable1400

Cr Merchandise inventory 1400

May 20Dr Account payable 23,600

Cash 22,892

Dr Merchandise inventory 708

(Seller)

May 11Dr Account receivable25,000

Cr Sales revenue 25,000

Dr Cost of goods sold16,750

Cr Merchandise inventory 16,750

May 12 DrSales return and allowance1400

Cr Account receivable 1400

Dr Merchandise inventory938

Cr Cost of goods sold938

May 20 Dr Cash 22,892

Dr Sales discount708

Cr Account receivable 23,600

Explanation:

Preparation of the Journal entry for Buyer

May 11Dr Merchandise inventory25,000

Cr Account payable 25,000

Dr Merchandise inventory410

Cr Cash 410

May 12Dr Account payable1400

Cr Merchandise inventory 1400

May 20Dr Account payable (25,000-1400)23,600

Cash (23,600*97%) 22,892

Dr Merchandise inventory 708

(23,600*3%)

Preparation of Journal entry (Seller)

May 11Dr Account receivable25,000

Cr Sales revenue 25,000

Dr Cost of goods sold16,750

Cr Merchandise inventory 16,750

May 12 DrSales return and allowance1400

Cr Account receivable 1400

Dr Merchandise inventory938

Cr Cost of goods sold938

May 20 Dr Cash 22,892

[(25,000-14000)*97%]

Dr Sales discount708

[(25,000-14000)*3%]

Cr Account receivable 23,600

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Answer from: Quest

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Sydney Retailing (buyer) and Troy Wholesalers (seller) enter into the following transactions. May 1...

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