Sydney Retailing (buyer) and Troy Wholesalers (seller) enter into the

sunshine022uv 2021-12-14 Answered
Sydney Retailing (buyer) and Troy Wholesalers (seller) enter into the following transactions.
1.1. Sydney accepts delivery of $29,000 of merchandise it purchases for resale from Troy: invoice dated May 11; terms 3/10, n/90; FOB shipping point. The goods cost Troy $19,430. Sydney pays $655 cash to Express Shipping for delivery charges on the merchandise.
1.2. Sydney returns $1,300 of the $29,000 of goods to Troy, who receives them the same day and restores them to its inventory. The returned goods had cost Troy $871.
2.0 Sydney pays Troy for the amount owed. Troy receives the cash immediately.
(Both Sydney and Troy use a perpetual inventory system and the gross method.)
1. Prepare journal entries that Sydney Retailing (buyer) records for these three transactions.
2. Prepare journal entries that Troy Wholesalers (seller) records for these three transactions.
Sydney pays Troy for the amount owed. Troy receives the cash immediately.
Note: Enter debits before credits.
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Expert Answer

boronganfh
Answered 2021-12-15 Author has 33 answers
Step 1
Accounts Payable balance: $29000$1300=$29,700
Discount received on early payments: $29,7003%=$831
1. Journal entries that sydney (buyer) records for these transactions
DateGeneral JournalDebit $Credit $May11Merchandise Inventory$29,000Accounts Payable$ 29,000May11Merchandise inventory$655Cash$655May12Accounts Payable$ 1,300Merchandise inventory$ 1,300May20Accounts Payable$ 27,700Merchandise Inventory$ 831Cash$ 26,869
2. Journal entries for troy ( seller) to record these transactions
DataGeneral JournalDebit $Credit $May11Accounts Receivables$ 29,000Sales$ 29,000May11Cost of goods sold$ 19,430Merchandise inventory$ 19,430May12Sales returns and allowances$ 1,300Accounts receivable$ 1,300May12Merchandise Inventory$ 871Cost of goods sold$ 871May20Cash$ 26,869Merchandise Inventory$ 831Accounts Payable$ 27,700

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Medicim6
Answered 2021-12-16 Author has 33 answers
Answer:
1. Sydney Buyer
11 Dr Accounts Payable $40,000
Cr Merchandise Inventory $40,000
11 Dr Merchandise Inventory $345
Cr Cash $345
12 Dr Merchandise Inventory $1,400
Cr Accounts Payable $1,400
20 Dr Accounts Payable $38,600
Cr Merchandise Inventory $1,158
Cr Cash $37,442
2. Troy - Seller
11 Dr Accounts Receivables $40,000
Cr Sales $40,000
Dr Cost of Goods Sold $30,000
Cr Merchandise Inventory $30,000
13 Dr Sales Returns and Allowances $1,400
Cr Accounts Receivables $1,400
Dr Cost of Good Sold $1,050
Cr Merchandise Inventory $1,050
21 Dr Cash $37,442
Dr Sales Discount $1,158
Cr Accounts Receivables $38,600
Explanation:
1. Preparation of journal entries that Sydney Co. records for these transactions.
1. SYDNEY BUYER
11 Dr Accounts Payable $40,000
Cr Merchandise Inventory $40,000
11 Dr Merchandise Inventory $345
Cr Cash $345
12 Dr Merchandise Inventory $1,400
Cr Accounts Payable $1,400
20 Dr Accounts Payable $38,600
($40,000$1,400)
Cr Merchandise Inventory $1,158
($38,600$37,442)
Cr Cash $37,442
[$38,800[($1,400×(100%3%)]
2. Preparation of the journal entries that Troy Corporation records for these transactions.
TROY - SELLER
11 Dr Accounts Receivables $40,000
Cr Sales $40,000
Dr Cost of Goods Sold $30,000
Cr Merchandise Inventory $30,000
13 Dr Sales Returns and Allowances $1,400
Cr Accounts Receivables $1,400
Dr Cost of Good Sold $1,050
Cr Merchandise Inventory $1,050
21 Dr Cash $37,442
[$38,800[($1,400×(100%3%)]
Dr Sales Discount $1,158
($38,600$37,442)
Cr Accounts Receivables $38,600
($40,000$1,400)
Workings:
May 11 Purchased goods =($40,000×[100%3%])
May 11 Purchased goods =$38,800
May 12 Returned goods =($1,400×[100%3%]) May 12 Returned goods =$1,358
May 20 Paid balance within the discount period =($38,800$1,358)
May 20 Paid balance within the discount period =$37,442

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