Question

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.

Answer 1

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.