Exercise 4-6 Analyzing and recording merchandise transactions-both buyer and seller L.O. P1, P2

On May 11, Smythe Co. accepts delivery of $39,500 of merchandise it purchases for resale from Hope Corporation. With the merchandise is an invoice dated May 11, with terms of 3/10, n/90, FOB shipping point. The goods cost Hope $26,465. When the goods are delivered, Smythe pays $670 to Express Shipping for delivery charges on the merchandise. On May 12, Smythe returns $2,680 of goods to Hope, who receives them one day later and restores them to inventory. The returned goods had cost Hope $1,796. On May 20, Smythe mails a check to Hope Corporation for the amount owed. Hope receives it the following day. (Both Smythe and Hope use a perpetual inventory system.) 1. Prepare journal entries that Smythe Co. records for these transactions.

2.Prepare journal entries that Hope Corporation records for these transactions.