Question

Jun 4 Willem Corporation purchased $4,000 worth of merchandise, terms 3/10, n/30, FOB shipping point, from Cate Corporation. The cost of the merchandise to Cate was $2,600.

6 The appropriate party paid shipping costs of $150.

10 Willem returned $700 worth of goods to Cate for full credit. The goods had a cost of $450 to Cate and were placed back into inventory.

12 Willem paid Cate the outstanding balance.

Required

1. Prepare the journal entries to record these transactions in Cate’s (seller) records. Cate uses the perpetual inventory system, and follows ASPE

Calculate the balance in Willem’s inventory account for the goods purchased from Cate.

Answer 1

Requirement 1:

Date	Account Titles and Explanation	Debit	Credit
June.04	Account Receivable-Willem Corporation	$           4,000
	Sales Revenue		$      4,000
	(To record sales made on account)
June.04	Cost Of Goods Sold	$           2,600
	Inventory		$      2,600
	( To record Cost of goods sold)
June.10	Sales return and allowance	$              700
	Account Receivable-Willem Corporation		$          700
	(To record sales returns)
June.10	Inventory	$              450
	Cost Of Goods Sold		$          450
	( To record Cost of goods sold)
June.12	Cash	$           3,201
	Sales Discount [3300*3/100]	$                99
	Account Receivable-Willem Corporation		$      3,300
	(To record account receivable received)

Requirement 2:

Balance of Willem's inventory account = $ 4,000+$ 150 - $ 700 = $ 3,450