Purchase-Related Transactions

Steritech Co., a furniture wholesaler, sells merchandise to Butler Co. on account, $86,000, terms n/30. The cost of the merchandise sold is $51,600. Steritech Co. issues a credit memorandum for $5,000 for merchandise that was damaged in shipment. Butler Co. agreed to keep the damaged merchandise. Illustrate the effects on the accounts and financial statements of Butler Co.

Financial Statement Effects b. The credit for damaged merchandise. Financial Statement Effects c. The payment of the invoice. Financial Statement Effects