Answer:
Sydney Retailing (buyer) and Troy Wholesalers (seller)
Journal Entries:
For the Buyer (Sydney):
May 11 Debit Inventory $30,000
Credit Accounts Payable $30,000
To record the purchase of goods on account with invoice dated May 11, terms 3/10, n/90, FOB shipping point.
Debit Freight-in $400
Credit Cash $400
To record the freight-in expense.
May 12 Debit Accounts Payable $1,300
Credit Inventory $1,300
To record the return of goods to Troy.
May 20 Debit Accounts Payable $28,700
Credit Cash $27,839
Credit Cash Discounts $861
To record the payment on account, including discounts.
For the seller (Troy Wholesalers):
May 11 Debit Accounts Receivable $30,000
Credit Sales Revenue $30,000
To record the sale of goods on credit with invoice dated May 11, terms 3/10, n/90, FOB shipping point.
Debit Cost of goods sold $20,100
Credit Inventory $20,100
To record the cost of goods sold.
May 12 Debit Sales Returns $1,300
Credit Accounts Receivable $1,300
To record the sales returns on account.
Debit Inventory $871
Credit Cost of goods sold $871
To record the cost of goods returned.
May 20 Debit Cash $27,839
Debit Cash Discounts $861
Credit Accounts Receivable $28,700
To record the receipt of cash on account, including discounts.
Explanation:
a) Data and Analysis:
For the Buyer (Sydney):
May 11 Inventory $30,000 Accounts Payable $30,000
with invoice dated May 11, terms 3/10, n/90, FOB shipping point.
Freight-in $400 Cash $400
May 12 Accounts Payable $1,300 Inventory $1,300
May 20 Accounts Payable $28,700 Cash $27,839 Cash Discounts $861
For the seller (Troy Wholesalers):
May 11 Accounts Receivable $30,000 Sales Revenue $30,000
with invoice dated May 11, terms 3/10, n/90, FOB shipping point.
Cost of goods sold $20,100 Inventory $20,100
May 12 Sales Returns $1,300 Accounts Receivable $1,300
Inventory $871 Cost of goods sold $871
May 20 Cash $27,839 Cash Discounts $861 Accounts Receivable $28,700
