On December 28, 2014, Avalon Co. purchased merchandise inventory from Normandy C

Question

On December 28, 2014, Avalon Co. purchased merchandise inventory from Normandy Co. at an invoice price of $35,600 with terms of 2/15/,n/30, F.O.B, shipping point. Normandy prepaid the freight cost of $375 and the goods cost Normandy $17,800. On December 1st, Avalon returned $3000 of the goods which Normandy places back into inventory at the cost of $1,500. On December 10th Avalon sent Normandy a check for the goods net of any discount, purchase returns, and inclusive of the freight cost. Both companies ulitize a perpetual inventory system.

1. Prepare Avalons Journal Entries for the aformentionied transactions.

2. Prepare Normandys Journal Entries for the aformentionied transactions.

Explanation / Answer

Books of Avalon Co. Amount (in $) Particulars Debit Credit Purchases 35600.00      Accounts Payable 35600.00 Accounts Payable 3000.00      Purchase Return 3000.00 Accounts Payable 32600.00 Freight 375.00          Cash 32323.00           Purchase discount 652.00 Books of Normandy Co. Amount (in $) Particulars Debit Credit Accounts Receivable 35600.00       Sales 35600.00 Cost of Goods Sold 17800.00       Inventory 17800.00 Outward Freight 375.00       Cash 375.00 Sales Return 3000.00       Accounts Receivable 3000.00 Inventory 1500.00    Sales Return 1500.00 Cash 32323.00 Sales Discount 652.00     Accounts Receivable 32600.00     Freight 375.00

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