Exercise 5-8 Analyzing and recording merchandise transactions-both buyer and seller LO P1, P2

On May 11, Sydney Co. accepts delivery of $37,500 of merchandise it purchases for resale from Troy Corporation. With the merchandise is an invoice dated May 11, with terms of 3/10, n/90, FOB shipping point. The goods cost Troy $25,125. When the goods are delivered, Sydney pays $520 to Express Shipping for delivery charges on the merchandise. On May 12, Sydney returns $2,080 of goods to Troy, who receives them one day later and restores them to inventory. The returned goods had cost Troy $1,394. On May 20, Sydney mails a check to Troy Corporation for the amount owed. Troy receives it the following day. (Both Sydney and Troy use a perpetual inventory system.)

1.

Prepare journal entries that Sydney Co. records for these transactions.

1 On May 11, Sydney Co. accepts delivery of $37,500 of merchandise it purchases for resale from Troy Corporation. With the merchandise is an invoice dated May 11, with terms of 3/10, n/90, FOB shipping point. The goods cost Troy $25,125. 2 When the goods are delivered, Sydney pays $520 to Express Shipping for delivery charges on the merchandise. 3 On May 12, Sydney returns $2,080 of goods to Troy, who receives them one day later and restores them to inventory. The returned goods had cost Troy $1,394. 4 On May 20, Sydney mails a check to Troy Corporation for the amount owed. Troy receives it the following day. 2) Prepare journal entries that Troy Corporation records for these transactions. 1 Record the merchandise sold on account. 2 Record the cost of goods sold. 3 Record the sales return. 4 Record the cost of sales return. 5 Record the cash collected for credit sales.