DO IT! 5.2 (LO 2) On October 5, Wang Company buys merchandise on account from Davis...

DO IT! 5.2 (LO 2) On October 5, Wang Company buys merchandise on account from Davis Company. The selling price of the goods is $4,800, and the cost to Davis Company is $3,100. On October 8, Wang returns defective goods with a selling price of $650 and a fair value of $100. Record the transactions on the books of Wang Company.

a. Record transactions of purchasing company.

b. Record transactions of selling company.

Solutions

Expert Solution

a		Debit	Credit
Oct 5	Inventory	4800
	Accounts Payable		4800
	(To record goods purchased on account)

Oct 8	Accounts Payable	650
	Inventory		650
	(To record return of defective goods)

b
Oct 5	Accounts Receivable	4800
	Sales Revenue		4800
	(To record credit sale)

Oct 5	Cost of Goods Sold	3100
	Inventory		3100
	(To record cost of goods sold on account)

Oct 8	Sales Returns and Allowances	650
	Accounts Receivable		650
	(To record credit granted for receipt of returned goods)

Oct 8	Inventory	100
	Cost of Goods Sold		100
	(To record fair value of goods returned)

ekkarill92 answered 1 year ago

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