(Repurchase Agreement) Zagat Inc. enters into an agreement on March 1, 2020, to sell aluminum ingots for $200,000 cash to Werner Metal Company. As part of this agreement, Zagat also agrees to repurchase from Werner the ingots in 60 days at the original sales price of $200,000 plus 2%.

Instructions

a. Prepare the journal entry necessary on March 1, 2020.

b. Prepare the journal entry for the repurchase of the ingots on May 1, 2020.