Question

On May 11, Sydney Co. accepts delivery of $40,000 of merchandise it purchases for resale from Troy Corporation. The merchandise is an invoice dated May 11, with terms of 3/10, n/90, FOB shipping point. The goods cost Troy $30,000. When the goods are delivered, Sydney pays $345 to Express Shipping for delivery charges on the merchandise. On May 12, Sydney returns $1,400 of goods to Troy, who receives them one day later and restores them to inventory. The returned goods had cost Troy $800. On May 20, Sydney mails a check to Troy Corporation for the amount owed. Troy receives it the following day. (Both Sydney and Troy use a perpetual inventory system.)
Prepare journal entries that Sydney Co. records for these transactions.
Prepare journal entries that Troy Corporation records for these transactions.

Answer 1

Answer:

Try records:

Accounts receivables 40,000 debit

      Sales revenue                 40,000 credit

COGS                          30,000 debit

        Merchandise               30,000 credit

Sales returns                1,400 debit

    Accounts receivable      1,400 credit

Merchandise        800 debit

       COGS                      800 credit

Cash                     37,442 debit

Sales discount       1,158 debit

        Accounts receivables      38,600 credit

Sidney records:

Merchandise          40,000 debit

         Accounts Payable 40,000 credit

Account payable            1,400 debit

    Merchandise                     1,400 credit

Accounts payable      38,600 credit

          Cash                           37,442 debit

          Merchandise                 1,158 debit

Explanation:

account balance 40,000 - 1,400 = $ 38,600

discount 38,600 x 3% = $ 1,158

cash due: 38,600 - 1,158 = 37,442‬