Exercise 54

Analyzing and recording merchandise transactions and returns

On May 12, Wilcox Company accepted delivery of $20,000 of merchandise and received an invoice dated May 11, with terms of 3/10, n/30, FOB Garner Companys factory. When the goods were delivered, Wilcox Company paid $185 to Express Shipping Service for the de- livery charges on the merchandise. The next day, Wilcox Company returned $800 of defec- tive goods to the seller, which received them one day later. On May 21, Wilcox Company mailed a cheque to Garner Company for the amount owed on that date. It was received the following day.

Required

a. Present the journal entries that Wilcox Company should record for these transac- tions.

b. Present the journal entries that Garner Company should record for these transactions.