Question

On September 7, 2019 North Shore Sporting Goods of Chilliwack purchased merchandise for $40,000 from Trident Boards of Toronto. Terms were 2/10, n/30; FOB warehouse (shipping point). Note: Trident’s cost of the $40,000 of merchandise it sold to North Share was $20,000. A $2,000 freight delivery bill was paid by North Shore to Inter-Province Trucking on September 9, 2019.

On September 10, 2019 North Shore returned some goods to Trident. Trident’s own truck picked up goods from North Shore which were returned in good condition to Trident’s Vancouver warehouse. (Selling price to North Shore of these returned items was $4,000, Trident cost = $2,000) The payment for the remaining merchandise was made by bank transfer on September 17, 2019.   Both companies use a perpetual inventory system. Ignore all taxes.

Record the journal entries for North Shore.   Omit explanations but include dates.                        

Record the journal entries for Trident. Omit explanations but include dates.                                 

Answer 1

For North Shore
Journal entry:
S.no.	Accounts title and explanations			Debit $	Credit $
a.	Merchandise inventory			40000
	Accounts pauyable					40000
	(for puchase)
b.	Merchandise inventory			2000
	Cash account					2000
	(for frieght paid)
c.	Accounts payable				4000
	Merchandise inventory				4000
	(for return of inventory)
d.	Accounts payable				36000
	Cash account					35280
	Merchandise inventory (36000*2%)			720
	(for payment made)
For trident:
Journal entry:
S.no.	Accounts title and explanations			Debit $	Credit $
a.	Accounts receivable				40000
	Sales revenue					40000
	(for sales made)
b.	cost of goods sold				20000
	Merchandise inventory				20000
	(for cost of goods sold)
c.	No entry for freight.
d.	Sales return and allowance			4000
	Accounts receivable				4000
	(for return)
e.	Merchandise inventory			2000
	Cost of goods sold					2000
	(for cost f goods sold reversed)
f.	Cash					35280
	Sales discount				720
	Accounts receivable				36000
	(for cash received)