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Concept explainers
Exercise 5-7
Recording sales, purchases, shipping, and returns—buyer and seller
P1 P2
Sydney Retailing (buyer) and Troy Wholesalers (seller) enter into the following transactions. Both Sydney and Troy use a perpetual inventory system and the gross method.
May 11 Sydney accepts delivery of $40,000 of merchandise it purchases for resale from Troy: invoice dated May ii; terms 3/10, n/90; FOB shipping point. The goods cost Troy $30,000. Sydney pays $345 cash to Express Shipping for delivery charges on the merchandise.
12 Sydney returns $1,400 of the $40,000 of goods to Troy, who receives them the same day and restores them to its inventory. The returned goods had cost Troy $1,050.
20 Sydney pays Troy for the amount owed. Troy receives the cash immediately.
1. Prepare
2. Prepare journal entries that Troy Wholesalers (seller) records for these three transactions.
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Chapter 5 Solutions
Connect Access Card For Fundamental Accounting Principles
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