Answer: Please see explanation for answer
Explanation:
A) Journal entry for Sydney retailing buyer
i)To record purchase of inventory on account
Date Account titles Debit Credit
May 11 Accounts Payable $20,500
Merchandise Inventory $20,500
ii)To record shipping expense paid
Date Account titles Debit Credit
May 11 Merchandise Inventory $ 41
Cash $ 410
iii) To record goods returned to seller
Date Account titles Debit Credit
May 12 Accounts Payable $1,300
Merchandise Inventory $1,300
iv To record payment on account.
Date Account titles Debit Credit
May 20 Accounts Payable $19,200
Merchandise Inventory $576
Cash $18,624
Calculation:
Accounts payable= Purchases− Purchase return
=$20,500−$1,300
=$19,200
Discount=Accounts payable X 3%
=$19,200×0.03
=$576
B) Journal entry for Troy - Seller
i)To record sales of goods on account
Date Account titles Debit Credit
May 11 Accounts receivable $20,500
Sales Revenue $20,500
ii) To record cost of goods sold
Date Account titles Debit Credit
May 11 Cost of goods sold $13,735
Merchandise Inventory $13,735
III) To record sales return
Date Account titles Debit Credit
May 12 Sales returns and allowance $1,300
Account receivable $1,300
iv) To record cost of goods sold reversed for sales return
Date Account titles Debit Credit
May 12 Merchandise Inventory $871
Cost of goods sold $871.
v) To record cash received for goods sold.
Date Account titles Debit Credit
May 20 Cash $19,200
Sales discount $576
Account receivables $18,624
Calculation:
Accounts receivables= sales− sales return
=$20,500−$1,300
=$19,200
Discount=receivables X 3%
=$19,200×0.03
=$576
