On July 12th, Williams Company accepted delivery of $35,000 of merchandise and r

Question

On July 12th, Williams Company accepted delivery of $35,000 of merchandise and received an invoice dated May 11, with terms of 3/10, n/30, FOB, Garner Company's factory. Garner's cost was $27,600. When the goods were delivered, Williams paid $185 Express Shipping Service for delivery charges on the merchandise. The next day, Williams Company returned $1,400 of goods of Garner which, a day later, put them back into inventory at a cost of $720. On July 21st, Williams Company mailed a check to Garner Company for the amount owed on that date. It was received the following day. Present the journal entries that Williams Company should record for these transactions assuming that a perpetual inventory system is used. Present the journal entries that Garner Company should record for these transactions assuming that a perpetual inventory system is used.

Explanation / Answer

1. In the books of Williams Co.

2. In the books of Garner Company

Date Account Titles Debit Credit $ $ July 12th Merchandise inventory 35,185 Accounts payable 35,000 Cash 185 July 13th Accounts payable 1,400 Merchandise inventory 1,400 July 21st Accounts payable 33,600 Cash 32,592 Purchase discount 1,008

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