Question

The following merchandise transactions occurred in December. Both companies use a perpetual inventory system.

Dec.	3		Ayayai Ltd. sold goods to Whispering Winds Corp. for $67,100, terms 2/10, n/30, FOB shipping point. The inventory had cost Ayayai $37,900.
	7		Shipping costs of $810 were paid by the appropriate company.
	8		Whispering Winds returned unwanted merchandise to Ayayai. The returned merchandise has a sales price of $2,100, and a cost of $1,080. It was restored to inventory.
	11		Ayayai received the balance due from Whispering Winds.

Answer 1

Journal entry : Ayayai Ltd.

Date	accounts & explanation	debit	credit
Dec 3	Account receivable-Whispering Winds Corp.	67100
	Sales revenue		67100
	Cost of goods sold	37900
	Merchandise inventory		37900
	(To record sales and cost of goods sold)
Dec 7	No entry
Dec 8	Sales return and allowance	2100
	Account receivable-Whispering Winds Corp		2100
	Merchandise inventory	1080
	Cost of goods sold		1080
	(To record sales return)
Dec 11	Cash (65000*98%)	63700
	Sales discount (65000*2%)	1300
	Account receivable-Whispering word corp.		65000
	(To record amount received)

Journal entry; Whispering winds corp :

Date	accounts & explanation	debit	credit
Dec 3	Merchandise inventory	67100
	Account payable-Ayayai Ltd.		67100
	(To record purchase)
Dec 7	Merchandise inventory	810
	Cash		810
	(To record freight paid)
Dec 8	Account payable-Ayayai Ltd.	2100
	Merchandise inventory		2100
	(To record purchase return)
Dec 11	Account payable-Ayayai Ltd.	65000
	Cash (65000*98%)		63700
	Merchandise inventory		1300
	(To record amount paid)