Answer:
On the books of Tuzun Company:
On June 10
Dr Merchandise Inventory $8,350
Cr Accounts payable$8,350
On June 11
Dr Merchandise inventory $560
Cr Cash $560
On June 12
Dr Account payable$350
Cr Merchandise inventory $350
On June 19
Dr Accounts payable $8,000
Cr Cash $7,840
Cr Merchandise Inventory $160
B.
On the books of Epps Company:
On June 10
Dr Accounts receivable $8,350
Cr Service revenue $8,350
(Being service provided is recorded)
Dr Cost of goods sold $4,800
Cr Merchandise inventory $4,800
(Being inventory sold at cost)
On June 12
Dr Accounts receivable $350
Cr Service revenue A/c $350
(Being returned inventory is recorded)
Dr Cost of goods sold $80
Cr Merchandise inventory A/c $80
(Being fair value is recorded)
On June 19
Dr Cash $7,840
Dr Sales discount $160
Cr Accounts receivable A/c $800
(Being payment is received)
Explanation:
A. Preparation of separate entries for each transaction on the books of Tuzun Company.
On the books of Tuzun Company:
On June 10
Dr Merchandise Inventory $8,350
Cr Accounts payable$8,350
(Being inventory purchased on credit)
On June 11
Dr Merchandise inventory $560
Cr Cash $560
(Being freight is paid by cash)
On June 12
Dr Account payable$350
Cr Merchandise inventory $350
(Being returned inventory is recorded)
On June 19
Dr Accounts payable $8,000 ($8,350 - $350)
Cr Cash $7,840
(8000-160)
C Merchandise Inventory $160[ ($8,350 - $350) × 2%]
(Being due amount is paid and the remaining balance is credited to the cash account)
B. Preparation of separate entries for each transaction for Epps Company.
On the books of Epps Company:
On June 10
Dr Accounts receivable $8,350
Cr Service revenue $8,350
(Being service provided is recorded)
Dr Cost of goods sold $4,800
Cr Merchandise inventory $4,800
(Being inventory sold at cost)
On June 12
Dr Accounts receivable $350
Cr Service revenue A/c $350
(Being returned inventory is recorded)
Dr Cost of goods sold $80
Cr Merchandise inventory A/c $80
(Being fair value is recorded)
On June 19
Dr Cash $7,840
Dr Sales discount $160
Cr Accounts receivable A/c $800
(Being payment is received)
