Question

On May 11, Sydney Co. accepts delivery of $29,000 of merchandiseit purchases for resale from Troy Corporation. With the merchandiseis an invoice dated May 11, with terms of 3/10, n/90, FOB shippingpoint. The goods cost Troy $19,430. When the goods are delivered,Sydney pays $535 to Express Shipping for delivery charges on themerchandise. On May 12, Sydney returns $2,140 of goods to Troy, whoreceives them one day later and restores them to inventory. Thereturned goods had cost Troy $1,434. On May 20, Sydney mails acheck to Troy Corporation for the amount owed. Troy receives it thefollowing day. (Both Sydney and Troy use a perpetual inventorysystem.)

 

1.

Prepare journal entries that Sydney Co. records for thesetransactions.

Entry #1: On May 11, Sydney Co. accepts delivery of $29,000 ofmerchandise it purchases for resale from Troy Corporation. With themerchandise is an invoice dated May 11, with terms of 3/10, n/90,FOB shipping point. The goods cost Troy $19,430.

Entry#2: When the goods are delivered, Sydney pays $535 toExpress Shipping for delivery charges on the merchandise.

Entry#3: On May 12, Sydney returns $2,140 of goods to Troy, whoreceives them one day later and restores them to inventory. Thereturned goods had cost Troy $1,434

Entry#4: On May 20, Sydney mails a check to Troy Corporation forthe amount owed. Troy receives it the following day.

2.

Prepare journal entries that Troy Corporation records for thesetransactions.

 

 

Entry#1: Record the merchandise sold on account.

Enrty#2: Record the cost of goods sold

Enrty#3: Record the sales return.

Entry#4:Record the cost of sales return.

Entry #5: Record the cash collected for credit sales.



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