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On May 11, Smythe Co. accepts delivery of $31,500 of merchandise it purchases for resale from Hope Corporation. With the merchandise is an invoice dated
On May 11, Smythe Co. accepts delivery of $31,500 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 $21,105. When the goods are delivered, Smythe pays $380 to Express Shipping for delivery charges on the merchandise. On May 12, Smythe returns $1,520 of goods to Hope, who receives them one day later and restores them to inventory. The returned goods had cost Hope $1,018. 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
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