Journal Entries

Required information PA6-1 Reporting Purchase Transactions between Wholesale and Retail Merchandisers Using Perpetual Inventory Systems (LO 6-3) (The following information applies to the questions displayed below.) The transactions listed below are typical of those involving New Books Inc. and Readers' Corner. New Books is a wholesale merchandiser and Readers' Comer is a retail merchandiser. Assume all sales of merchandise from New Books to Readers' Corner 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 August 31. a New Books sold merchandise to Readers' Corner at a selling price of $550,000. The merchandise had cost New Books $415,000. b. Two days later, Readers' Corner complained to New Books that some of the merchandise differed from what Readers' Corner had ordered, New Books agreed to give an allowance of $10,000 to Readers' Corner. Readers' Corner also returned some books, which had cost New Books $2,000 and had been sold to Readers' Corner for $3,500. C. Just three days later, Readers' Comer paid New Books, which settled all amounts owed. PA6-1 Part 2 2. Prepare the journal entries that Readers' Corner would record. (If no entry is required for a transaction/event, select "No Journal Entry Required in the first account field.) O Record the purchase of $550,000 on account. 2 Record the return of unsatisfactory merchandise for which credit was given. 3 Record the payment in full