12.

PB6-2 (Algo) Reporting Sales Transactions between Wholesale and Retail Merchandisers Using Perpetual Inventory Systems [LO 6-4, LO 6-6]

Skip to question

[The following information applies to the questions displayed below.]

The transactions listed below are typical of those involving Southern Sporting Goods (SSG) and Sports R Us (SRU). SSG is a wholesale merchandiser and SRU is a retail merchandiser. Assume all sales of merchandise from SSG to SRU are made with terms n/30, and the two companies use perpetual inventory systems. Assume the following transactions between the two companies occurred in the order listed during the year ended December 31.

! Required information PB6-2 (Algo) Reporting Sales Transactions between Wholesale and Retail Merchandisers Using Perpetual Inventory Systems (LO 6-4, LO 6-6) [The following information applies to the questions displayed below.] The transactions listed below are typical of those involving Southern Sporting Goods (SSG) and Sports R Us (SRU). SSG is a wholesale merchandiser and SRU is a retail merchandiser. Assume all sales of merchandise from SSG to SRU are made with terms n/30, and the two companies use perpetual inventory systems. Assume the following transactions between the two companies occurred in the order listed during the year ended December 31. a. SSG sold merchandise to SRU at a selling price of $190,000. The merchandise had cost SSG $120,000. b. Two days later, SRU complained to SSG that some of the merchandise differed from what SRU had ordered. SSG agreed to give an allowance of $2,000 to SRU. SRU also returned some sporting goods, which had cost SSG $18,500 and had been sold to SRU for $23,000. C. Just three days later SRU paid SSG, which settled all amounts owed. Required: 1. For each of the events (a) through (C), indicate the amount and direction of the effect on SSG in terms of the following items. (Enter any decreases to account balances with a minus sign.) Transaction Sales Revenues Sales Returns Sales Allowances Net Sales Cost of Goods Sold Gross Profit a. 190,000 0 0 190,000 120,000 70,000 b. 0 0 C. 0 0 0 0 Journal entry worksheet Record the sales on account of $190,000 to SRU. Note: Enter debits before credits. General Journal Debit Credit Transaction a(1) 190,000 Inventory Accounts Payable 190,000 Record entry Clear entry View general journal Journal entry worksheet Record the return of unsatisfactory merchandise by SRU for which credit was given to the customer. Note: Enter debits before credits. Transaction General Journal Debit Credit b(1) Accounts Payable 165,000 Cash 165,000 Record entry Clear entry View general journal Journal entry worksheet