Exerclse 4-7 Recording sales, purchases, shlpplng, and returns-buyer and seller

Question

Exerclse 4-7 Recording sales, purchases, shlpplng, 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 $28, 500 of merchandise it purchases for resale from Troy: invoice dated May 11: terms 3/10, n/90: FOB shipping point. The goods cost Troy $19,095 Sydney pays $525 cash to Express Shipping for delivery charges on the merchandise. 12 Sydney returns $1,400 of the $28, 500 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 (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 1Required 2 Prepare journal entries that Sydney Retailing (buyer) records for these three transactions. View transaction list Journal entry worksheet Sydney pays Troy for the amount owed. Troy receives the cash immediately Note: Enter debits before credits. Date General Journal Debit Credit May 20 Accounts payable andise inventory Record entry Clear entry View generaljounal Required 1 Required2 >

Explanation / Answer

Answer: The journal entry in the books of Sydney (buyer) would be as follows: Journal Entry Date Accounts title and explanation Debit Credit May-11 Purchases $             28,500.00 Accounts Payable $         28,500.00 (To record purchase of goods) May-11 Transportation-in $                   525.00 Cash $              525.00 (To record transportation cost) May-12 Accounts Payable $                1,400.00 Purchases return and allowances $           1,400.00 (To record purchase return) May-20 Accounts Payable $             27,100.00 Purchase Discount $              813.00 ($27,100*3%) Cash $         26,287.00 ($27,100-$813) (To record payment to creditor) The journal entry in the books of Troy (seller) would be as follows: Journal Entry Date Accounts title and explanation Debit Credit May-11 Accounts receivable $             28,500.00 Sales Revenue $         28,500.00 (To record menchandise sold on account) May-11 Cost of goods sold $             19,095.00 Merchandise Inventory $         19,095.00 (To record cost of goods sold) May-12 Sales return and allowance $                1,400.00 Accounts receivable $           1,400.00 (To record sales return) May-12 Merchandise Inventory $                   938.00 Cost of goods sold $              938.00 (To record cost of sales return) May-20 Cash $             26,287.00 ($27,100-$813) Sales Discount $                   813.00 ($27,100*3%) Accounts receivable $         27,100.00 (To record cash collected from customer)

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