Question

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

May		11		Sydney accepts delivery of $40,000 of merchandise it purchases for resale from Troy: invoice dated May 11; terms 3/10, n/90; FOB shipping point. The goods cost Troy $30,000. Sydney pays $345 cash to Express Shipping for delivery charges on the merchandise.
		12		Sydney returns $1,400 of the $40,000 of goods to Troy, who receives them the same day and restores them to its inventory. The returned goods had cost Troy $1,050.
		20		Sydney pays Troy for the amount owed. Troy receives the cash immediately.

Assume that both buyer and seller use a periodic inventory system and the gross method.

1. Prepare journal entries that Sydney Retailing records for these transactions.
2. Prepare journal entries that Troy Wholesalers records for these transactions.

Everytime i say merchandise inventory it is wrong . eveyrthing else is right even the numbers

Answer 1

Journal entries : Sydney retailing

Date	account and explanation	Debit	Credit
May 11	Purchase	40000
	Account payable		40000
	(To record purchase)
	Freight in	345
	Cash		345
	(To record freight paid)
May 12	Account payable	1400
	Purchase return and allowance		1400
	(To record purchase return)
May 20	Account payable (40000-1400)	38600
	Cash		37442
	Purchase discount		1158
	(To record amount paid)

Journal entry : Troy Wholesalers

Date	account and explanation	Debit	Credit
May 11	Account receivable	40000
	Sales revenue		40000
	(To record sales)
May 12	Sales return and allowance	1400
	Account receivable		1400
	(To record sales return and allowance)
May 20	Cash	37442
	Sales discount	1158
	Account receivable		38600
	(To record amount received)