Question
In: Accounting
5.Thorsten Company, a trendy clothing retailer, had the following transactions in March: March 2 Purchased merchandise...
5.Thorsten Company, a trendy clothing retailer, had the following transactions in March:
March 2 Purchased merchandise from Sabine Company under the following terms: $1,800 invoice price, 2/15, n/60, FOB factory. (The cost of the merchandise to Sabine Company was $990.)
March 3 Paid UBS Shipping $125 for shipping charges on the purchase of March 2.
March 4 Returned to Sabine Company unacceptable merchandise that had an invoice price of $300 (and a cost to Sabine of $165). Sabine returned the merchandise to inventory.
March 17 Sent a cheque to Sabine Company for the March 2 purchase, net of the discount and the returned merchandise.
Required Assuming both Thorsten and Sabine use a perpetual inventory system:
a. Present the journal entries Thorsten Company should record for these transactions.
b. Present the journal entries Sabine Company should record for these transactions.
Solutions
Expert Solution
FOB factory or FOB shipping point or origin means the purchaser is responsible for paying the shipping charges from the shipping point to the final destination.Such cost are part of total cost of purchasing merchandise inventory.Therefore it is debited to merchandise inventory account.
ekkarill92 answered 2 years agoRelated Solutions
5.Thorsten Company, a trendy clothing retailer, had the following transactions in March: March 2 Purchased merchandise...
5.Thorsten Company, a trendy clothing retailer, had the
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March 2 Purchased merchandise from Sabine
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n/60, FOB factory. (The cost of the merchandise to Sabine Company
was $990.)
March 3 Paid UBS Shipping $125 for shipping
charges on the purchase of March 2.
March 4 Returned to Sabine Company unacceptable
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CHART
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