Question

Transactions for Buyer and Seller Shore Co. sold merchandise to Blue Star Co. on account, $111,400, terms FOB shipping point, 2/10, n/30. The cost of the goods sold is $66,840. Shore paid freight of $1,800. Journalize Shore Co.'s entry for the sale, purchase, and payment of amount due. If an amount box does not require an entry, leave it blank. Journalize Blue Star Co.'s entry for the sale, purchase, and payment of amount due. If an amount box does not require an entry, leave it blank.

Answer 1

Answer:

SHORE CO BOOKS:

accounts receivables    111,400 debit

               sales revenues                  111,400 credit

--to record the sale to Blue Star Co---

COGS                            66,840 debit

          inventory                              66,840 credit

--to record cost of goods sold in previuos sale--

freight-out                       1,800 debit

              cash                                   1,800 credit

--to record payment of freight to transportist--

Cash                                111,400 debit

     Accounts Receivable               111,400 credit

--to record collectiong from Blue Star CO--

BLUE STAR CO BOOKS

Inventory                 111,400 debit

        Accounts Payable                111,400 credit

--to record the purchase of goods from SHORE CO--

Accounts Payable       111,400 debit

                Cash                            111,40 credit

--to record payment to SHORE CO--

Explanation:

  Shore paid freight of $1,800 as the transfership of ownership occurs at destination point thus, the good belong to Shore and must carry the cost of transportation.

Blue start only does the purchase and payment entries.

We assume the  payment is at nominal as we aren't given the information it was during discount date.