On May 11, 2014, Wilson Purchasing purchased $25,000 of merchandise from Hostel Sales; terms 3/10, n/90, FOB
Question:
Required
a. Present the journal entries that Wilson Purchasing should record for these transactions. Assume that Wilson uses a perpetual inventory system.
b. Present the journal entries that Hostel Sales should record for these transactions. Assume that Hostel uses a perpetual inventory system.
Analysis Component:
Assume that the buyer, Wilson Purchasing, borrowed enough cash to pay the balance on the last day of the discount period at an annual interest rate of 4% and paid it back on the last day of the credit period. Calculate how much the buyer saved by following this strategy. Use a 365-day year and round all calculations to the nearest whole cent.
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Related Book For
Fundamental Accounting Principles
ISBN: 978-0071051507
Volume I, 14th Canadian Edition
Authors: Larson Kermit, Tilly Jensen
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