The transactions listed below are typical of those involving New Books Incorporated and Readers’ Corner. New Books is a wholesale merchandiser and Readers’ Corner is a retail merchandiser. Assume all sales of merchandise from New Books to Readers’ Corner are made with terms n/30, and the two companies use perpetual inventory systems. Assume the following transactions between the two companies occurred in the order listed during the year ended August 31. New Books sold merchandise to Readers’ Corner at a selling price of $575,000. The merchandise had cost New Books $425,000.Two days later, Readers’ Corner complained to New Books that some of the merchandise differed from what Readers’ Corner had ordered. New Books agreed to give an allowance of $12,500 to Readers’ Corner. Readers’ Corner also returned some books, which had cost New Books $2,500 and had been sold to Readers’ Corner for $4,000.Just three days later, Readers’ Corner paid New Books, which settled all amounts owed. Prepare the journal entries New Books would record. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)Record the sales on account of $575,000 to Readers’ Corner on terms n/30. 2Record the cost of goods sold of $425,000. 3Record the returns and allowances granted to Reader's Corner. 4Record the cost of goods sold adjustment to inventory. 5Record the receipt of payment in full from Readers’ Corner.

A journal is a concise record of every transaction a company makes and it explains how transactions…

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The transactions listed below are typical of those involving New Books Incorporated and Readers’ Corner. New Books is a wholesale merchandiser and Readers’ Corner is a retail merchandiser. Assume all sales of merchandise from New Books to Readers’ Corner are made with terms n/30, and the two companies use perpetual inventory systems. Assume the following transactions between the two companies occurred in the order listed during the year ended August 31.

New Books sold merchandise to Readers’ Corner at a selling price of $575,000. The merchandise had cost New Books $425,000.
Two days later, Readers’ Corner complained to New Books that some of the merchandise differed from what Readers’ Corner had ordered. New Books agreed to give an allowance of $12,500 to Readers’ Corner. Readers’ Corner also returned some books, which had cost New Books $2,500 and had been sold to Readers’ Corner for $4,000.
Just three days later, Readers’ Corner paid New Books, which settled all amounts owed.

Prepare the journal entries New Books would record. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)