Paul's Musical Instrument Company and Sally's Manufacturing Company engaged in the following transactions with each other during March 2020:

Mar. 2	Paul's Company purchased merchandise on account with a list price of $76,000 from Sally's Company. The terms were 3/EOM, net 60, FOB shipping point. Trade discounts of 13%, 10%, and 6% were granted by Sally. (Please note that trade discounts should NOT be recorded in the books of either the buyer nor the seller. Please refer to page 229 of the textbook if you don't know how to treat trade discounts.)
Mar. 6	The buyer paid the freight bill on the purchase of March 2, $1,460.
Mar. 9	The buyer returned damaged merchandise with an invoice price of $3,800 to the seller, and received full credit.
Mar. 31	The buyer paid the seller the amount due on the purchase.

Both the buyer and the seller use the periodic inventory method.

Required: Prepare the journal entries for the buyer and the seller.

Solutions

Expert Solution

Journal entries for the buyer:

Date	General Journal	Debit	Credit
Mar. 2	Purchases	$ 76,000
	Account Payable		$ 76,000
	(To record Inventory purchased on account)

Mar. 6	Freight-In Expenses	$ 1,460
	Cash		$ 1,460
	( To record freight expense)

Mar. 9	Account Payable	$ 3,800
	Purchases Returns		$ 3,800
	( To record purchase returns)

Mar. 31	Account Payable [76000-3800]	$ 72,200
	Purchase Discount [72200*3%]		$ 2,166
	Cash		$ 70,034
	( To record payment of accounts payable)

Journal entries for the Seller:

Date	General Journal	Debit	Credit
Mar. 2	Account Receivable	$ 76,000
	Sales Revenue		$ 76,000
	( To record sales on account)

Mar. 9	Sales Returns and Allowance	$ 3,800
	Accounts Receivable		$ 3,800
	( To record sales returns)

Mar. 31	Cash [76000-3800]	$ 70,034
	Sales Discount [72200*3%]	$ 2,166
	Accounts Receivables		$ 72,200
	( To record collection of accounts receivables)

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

Richmond Company engaged in the following transactions during 2019:

Payable TransactionsRichmond Company engaged in the following transactions during 2019:Purchased $160,000 of supplies from ABC Supplies on February 16. Amount due in full on March 31.Paid for 25% of the purchased merchandise (Transaction a) on February 26.On March 31 negotiated a payment extension with ABC for the remainder of the balance from the February 16 purchase by signing a 1-year, 10% note.Borrowed $300,000 on a 10-month, 8% interest-bearing note on April 30.Purchased $78,000 of merchandise on June 4. Amount due...

During March, the business engaged in the following transactions, All figures are GST (GST is 15%)inclusive...

During March, the business engaged in the following transactions, All figures are GST (GST is 15%)inclusive where applicable: Journalise each transaction. Key journal entries by transaction letter, using the format below: General Journal Transactions Accounts Debit ($) Credit ($) 1 March: Borrowed $45,000 from the bank and signed a bill payable in the name of the business. 2 March: Paid cash of $40,000 to acquire a motor vehicle. 4 March: Performed service for a customer and received cash of...

he newly formed Buffalo School District engaged in the following transactions and other events during the...

he newly formed Buffalo School District engaged in the following transactions and other events during the year:levied and collected property taxes of $110 million. 2. It issued $30 million in long-term bonds to construct a building. It placed the cash received in a special fund set aside to account for the bond proceeds. 3. During the year it constructed the building at a cost of $25 million. It expects to spend the $5 million balance in the following year. The...

Lynbrook Securities engaged in the following transactions during 2020: 1. Purchased $160,000 of supplies from Scan...

Lynbrook Securities engaged in the following transactions during 2020: 1. Purchased $160,000 of supplies from Scan House Supplies on February 1, terms 2/15, net 30. Use the Net Method to record the purchase. 2. Paid for the purchase of merchandise (Transaction 1) on February 26. 3. On April 1 negotiated a payment extension with Capital Products for a $10,000 Accounts Payable balance by signing a 1-year, 9% note. 4. Borrowed $200,000 on a 9-month, 6% interest-bearing note on May 31....

Mead Company uses a perpetual inventory system and engaged in the following transactions during the month...

Mead Company uses a perpetual inventory system and engaged in the following transactions during the month of May: Date Transaction May 1 Made cash sales of $8,100; the cost of the inventory was $3,100. 5 Purchased $2,400 of inventory on credit. 9 Made credit sales of $3,500; the cost of the inventory sold was $2,100. 13 Paid sales salaries of $800 and office salaries of $500. 14 Paid for the May 5 purchases. 18 Purchased sales equipment costing $5,100; made...

The McMillan Corporation incorporated on September 2, 2019. The company engaged in the following transactions during...

The McMillan Corporation incorporated on September 2, 2019. The company engaged in the following transactions during its first month of operations: Sep 2: Issued Capital stock in exchange for $900,000 cash. Sep 4: Purchased land and a building for $350,000. The value of the land was $50,000, and the value of the building was $300,000. The company paid $200,000 cash and issued a note payable for the balance. Sep 5: Borrowed $50,000 from the bank by issuing a note payable....

Schumacher Company uses the perpetual inventory system, and it engaged in the following transactions during 2014:...

Schumacher Company uses the perpetual inventory system, and it engaged in the following transactions during 2014: 1) Started the business by issuing common stock for $8,100 cash 2) Paid cash to purchase $5,200 of inventory 3) Sold inventory that cost $3,300 for $7,850 cash 4) Incurred and paid operating expenses, $270 Schumacher Company engaged in the following transactions during 2015: 1) Paid cash to purchase $6,300 of inventory 2) Sold inventory that cost $7,600 for $16,350 cash 3) Incurred and...

Packard Company engaged in the following transactions during Year 1, its first year of operations:

Packard Company engaged in the following transactions during Year 1, its first year of operations: (Assume all transactions are cash transactions.)1) Acquired $950 cash from the issue of common stock.2) Borrowed $420 from a bank.3) Earned $650 of revenues.4) Paid expenses of $250.5) Paid a $50 dividend.During Year 2, Packard engaged in the following transactions: (Assume all transactions are cash transactions.)1) Issued an additional $325 of common stock.2) Repaid $220 of its debt to the bank.3) Earned revenues of $750.4)...

Lexington Company engaged in the following transactions during Year 1, its first year in operation:

Lexington Company engaged in the following transactions during Year 1, its first year in operation: (Assume all transactions are cash transactions)Acquired $6,000 cash from issuing common stock.Borrowed $4,400 from a bank.Earned $6,200 of revenues.Incurred $4,800 in expenses.Paid dividends of $800.Lexington Company engaged in the following transactions during Year 2: (Assume all transactions are cash transactions)Acquired an additional $1,000 cash from the issue of common stock.Repaid $2,600 of its debt to the bank.Earned revenues, $9,000.Incurred expenses of $5,500.Paid dividends of $1,280....

Sanchez Company engaged in the following transactions during Year 1: 1) Started the business by issuing...

Sanchez Company engaged in the following transactions during Year 1: 1) Started the business by issuing $13,700 of common stock for cash. 2) The company paid cash to purchase $8,200 of inventory. 3) The company sold inventory that cost $5,600 for $11,650 cash. 4) Operating expenses incurred and paid during the year, $5,100. Sanchez Company engaged in the following transactions during Year 2: 1) The company paid cash to purchase $12,000 of inventory. 2) The company sold inventory that cost...

Subjects