Question

Sanyo White Goods LLC is a dealer of a variety of white goods. It sells to various retailers throughout the country. During the month of March, 2019, the following transactions took place.

1.      On 1 March, 2019, Sanyo White Goods LLC purchases $120,000 of merchandise from Samsung plc. A trade discount of $20,000 was available with a further 10% cash discount if payment were made within 10 days and  shipping terms FOB  Destination

2.      On 1 March, 2019, Sanyo White Goods LLC purchases $20,000 of merchandise  from Daewoo plc with a trade discount of 20% for Cash.

3.      On 17 March, 2019, Sanyo White Goods LLC   returns goods worth $15,000 to Samsung plc.

4.      On 20 March, 2019, Sanyo White Goods LLC   makes the final payment from Samsung plc for the transaction of 1 March 2019.

5.      On 20 March, 2019, Samsung plc pays Freight Charges of $600.

Required:

a)        Pass the necessary Journal Entries in the books of Sanyo White Goods LLC to record each of the above transactions.

b)        Pass the necessary Journal Entries in the books of Salalah Trading LLC to record each of the above transactions.

Answer 1

Answer

a.Journal Entries in the books of Sanyo White Goods LLC
Date	General Ledger	Debit	Credit
01-Mar-19	Purchase Account Dr	$     1,00,000.00
	To Account payable - Samsung Plc		$      1,00,000.00
Trade discount should not account in the books.($120,000-$20,000) =$100,000.
01-Mar-19	Purchase Account Dr	$        16,000.00
	To cash account		$          16,000.00
Trade discount in the invoice itself, hence final invoice value will 20000*80%=$16,000.
17-Mar-19	Account Payable -Samsung Plc	$        15,000.00
	Purchase return		$          15,000.00
Inventory returned
20-Mar-19	Account payable -Samsung plc	$        85,000.00
	To cash		$          85,000.00
Amount paid $100,000-$15,000 =$85,000.(amount paid after 10 days)
No entry required in the books of Sanyo white good LLC for frieght paid by samsung.

Note : To details available to record Journal Entries in the books of Salalah Trading LLC