On December 15, 2020, Trim-Sails entered into a contract to sell inventory to Flush-with-Funds for $600,000. In a separate contract entered into on the same
On December 15, 2020, Trim-Sails entered into a contract to sell inventory to Flush-with-Funds for $600,000. In a separate contract entered into on the same day, Trim-Sails agreed to buy similar inventory from Flush-with-Funds on January 14, 2021 for $605,000. The financial year ends on December 31 for both companies.
Required:
1. Explain whether the two contracts should be treated as two contracts or one contract.
2. Prepare the journal entries for Trim-Sails to record the transactions on December 15, 2020, December 31, 2020, and January 14, 2021.
3. Prepare the journal entries for Flush-with-Funds to record the transactions on December 15, 2020, December 31, 2020, and January 14, 2021.
Step by Step Solution
3.37 Rating (156 Votes )
There are 3 Steps involved in it
Step: 1
1 ans REPURCHASE AGREEMENT Allows company to transfer an asset to a customer but having a unconditi...
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Authors: Arnold J. Goldman, William D. Sigismond
9th edition
1133586562, 978-1285632995, 1285632990, 978-1285675367, 978-1133586562
