Question
Question 1 (24 marks) On Nov 30, Omni Company (Omni) purchases merchandise for resale from Diablo Limited (Diablo) with an invoice price of $9,700 and
Question 1 (24 marks) On Nov 30, Omni Company (Omni) purchases merchandise for resale from Diablo Limited (Diablo) with an invoice price of $9,700 and credit terms 3/10, n/45, FOB shipping point. The goods cost Rain $4,500. On Nov 30, Omni pays shipping charges of $330 on the purchase. On Dec 2, Omni returns unacceptable merchandise to Diablo that has an invoice price of $800. The retuned goods cost Diablo $350. On Dec 5, Omni discovers that $660 of goods are damaged but are still of some use and, therefore, keeps the units. Diablo sends Omni a credit memorandum for $400 to compensate for the damage. On Dec 8, Omni pays for the amount owed and Diablo receives it on the same day. (Both Omni and Diablo use a perpetual inventory system.) Required 1. Prepare journal entries that Omni Limited records for each transaction in November and December. (11 marks) 2. Prepare journal entries that Diablo Company records for each transaction in November and December. (13 marks) (No narration is required)
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