On May 11, Sydney Co. accepts delivery of $24,000 of merchandise it purchases fo

Question

On May 11, Sydney Co. accepts delivery of $24,000 of merchandise it purchases for resale from Troy Corporation. With the merchandise is an invoice dated May 11, with terms of 3/10, n/90, FOB shipping point. The goods cost Troy $16,080. When the goods are delivered, Sydney pays $485 to Express Shipping for delivery charges on the merchandise. On May 12, Sydney returns $1,940 of goods to Troy, who receives them one day later and restores them to inventory. The returned goods had cost Troy $1,300. On May 20, Sydney mails a check to Troy Corporation for the amount owed. Troy receives it the following day. 1. Prepare entries for the buyer, Sydney Co., who uses a periodic inventory system.

Explanation / Answer

11-May Purchases 24000       Accounts payable 24000 11-May Transportation-in 485        Cash 485 12-May Accounts payable 1940        Purchases returns 1940 20-May Accounts payable 22060         Purchases discounts 662 =22060*3%         Cash 21398

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