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In: Accounting
Exercise 5–4 Analyzing and recording merchandise transactions and returns On May 12, Wilcox Company accepted delivery...
Exercise 5–4
Analyzing and recording merchandise transactions and
returns
On May 12, Wilcox Company accepted delivery of $20,000 of
merchandise and received an invoice dated May 11, with terms of
3/10, n/30, FOB Garner Company’s factory. When the goods were
delivered, Wilcox Company paid $185 to Express Shipping Service for
the de- livery charges on the merchandise. The next day, Wilcox
Company returned $800 of defec- tive goods to the seller, which
received them one day later. On May 21, Wilcox Company mailed a
cheque to Garner Company for the amount owed on that date. It was
received the following day.
Required
a. Present the journal entries that Wilcox Company should
record for these transac- tions.
b. Present the journal entries that Garner Company should
record for these transactions.
Solutions
Expert Solution
Ans.
a. Present the journal entries that Wilcox Company should record for these transac- tions.
| Date | Particulars | Debit | Credit |
| 11-May | Purchase | $ 20,000.00 | |
| Garner | $ 20,000.00 | ||
|
Being Purchased merchandise on credit,
invoice dated May 11, terms 3/10, n/30 |
|||
| 12-May | Delivery Expenses | $ 185.00 | |
| Bank | $ 185.00 | ||
| Being Delivery Expenses paid | |||
| 13-May | Garner | $ 800.00 | |
| Purchase Return | $ 800.00 | ||
| Being returned defective merchandise. | |||
| 21-May | Garner | $ 19,200.00 | |
| Bank | $ 18,624.00 | ||
| Discount received | $ 576.00 | ||
|
Being Paid for the purchase of May 11
less the discount. |
b. Present the journal entries that Garner Company should record for these transactions.
| Date | Particulars | Debit | Credit |
| 11-May | Wincolx | $ 20,000.00 | |
| Sales | $ 20,000.00 | ||
| Being sold merchandise under terms of 3/10, n/30. | |||
| 14-May | Sales Return | $ 800.00 | |
| Wilcox | $ 800.00 | ||
| Being customer returned defective merchandise. | |||
| 22-May | Cash | $ 18,624.00 | |
| Discount allowed | $ 576.00 | ||
| Wilcox | $ 19,200.00 | ||
| Received payment for the May 11 sale less the discount. |
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