Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please help with the net saving question (analysis component) On May 11, 2020, Wilson Purchasing purchased $25,000 of merchandise from Happy Sales; terms 3/10, n/90,

image text in transcribedimage text in transcribedimage text in transcribedPlease help with the net saving question (analysis component)

On May 11, 2020, Wilson Purchasing purchased $25,000 of merchandise from Happy Sales; terms 3/10, n/90, FOB Happy Sales. The cost of the goods to Happy was $20,000. Wilson paid $1,500 to Express Shipping Service for the delivery charges on the merchandise on May 11. On May 12, Wilson returned $4,000 of goods to Happy Sales, which restored them to inventory. The returned goods had cost Happy $3,200. On May 20, Wilson mailed a cheque to Happy for the amount owed on that date. Happy received and recorded the cheque on May 21. Required: a. Present the journal entries that Wilson Purchasing should record for these transactions. Assume that Wilson uses a perpetual inventory system. View transaction list View journal entry worksheet X No Date General Journal Debit Credit 1 May 11, 2020 Merchandise inventory 25,000 Accounts payable - Happy Sales 25,000 2 May 11, 2020 Merchandise inventory 1,500 Cash 1,500 3 May 12, 2020 Accounts payable - Happy Sales 4,000 Merchandise inventory 4,000 4 May 20, 2020 Accounts payable - Happy Sales 21,000 Cash 20,580 Merchandise inventory b. Present the journal entries that Happy Sales should record for these transactions. Assume that Happy uses a perpetual invent system. View transaction list View journal entry worksheet No Date General Journal Debit Credit 1 May 11, 2020 Accounts receivable - Wilson Purchasing 25,000 Sales 25,000 2 May 11, 2020 Cost of goods sold 20,000 Merchandise inventory 20,000 3 May 12, 2020 Sales returns and allowances 4,000 Accounts receivable - Wilson Purchasing 4,000 4 May 12, 2020 Merchandise inventory 3,200 Cost of goods sold 3,200 5 May 21, 2020 Cash 20,580 Sales discounts 420 Accounts receivable - Wilson Purchasing 21,000 Analysis Component: Assume that the buyer, Wilson Purchasing, borrowed enough cash to pay the balance on the last day of the discount period at an annual interest rate of 4% and paid it back on the last day of the credit period. Calculate how much the buyer saved by following this strategy. (Use a 365-day year. Round intermediate calculations and final answer to 2 decimal places.) Net savings

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Energy Audit And Management Concept Methodologies Procedures And Case Studies

Authors: L. Ashok Kumar, Gokul Ganesan

1st Edition

978-1032067797

More Books

Students also viewed these Accounting questions

Question

2. Clearly identify time constraints.

Answered: 1 week ago

Question

1. Describe the power of nonverbal communication

Answered: 1 week ago