Question 3

Part A:

Part B:

Journal entry for question three(1-5)

1. Record the sales on account of 555,000 to readers corner on terms n/30

2. Record the cost of goods sold of 417,000

3.Record the return of 14,100 unsatisfactory merhcandise of readers corner for which credit was given to the customer

4.Record the cost of goods sold adjustment to inventory

5. Record the payment in full from readers corner

Required Information The following information applies to the questions displayed below! The transactions listed below are typical of those involving New Books Inc. and Readers' Corner New Books is a wholesale merchandiser and Readers Corner is a retail merchandiser Assume all sales of merchandise from New Books to Readers Corner are made with terms n/30. and the two companies use perpetual Inventory systems. Assume the following transactions between the two companies occurred in the order listed during the year ended August 31, a. New Books sold merchandise to Readers Corner at a selling price of $555,000. The merchandise had cost New Books $417,000. 6. Two days later, Readers' Corner complained to New Books that some of the merchandise differed from what Readers Comer had ordered. New Books agreed to give an allowance of $10.500 to Readers' Comer Readers Corner also returned some books, which had cost New Books $2,100 and had been sold to Readers Corner for $3,600 c. Just three days later. Readers' Corner paid New Books, which settled all amounts owed. Required: 1. For each of the events (a) through (a. Indicate the amount and direction of the effect on New Books in terms of the following items. (Enter any decreases to account balances with a minus sign.) Transaction Sales Revenues Sales Returns Sales Allowances Net Sales Cost of Goods Sold Gross Profit b. Required Information The following information applies to the questions displayed below) The transactions listed below are typical of those involving New Books Inc. and Readers' Comer New Books is a wholesale merchandiser and Readers' Comer is a retail merchandiser. Assume all sales of merchandise from New Books to Readers' Corner are made with terms n/30, and the two companies use perpetual Inventory systems. Assume the following transactions between the two companies occurred in the order listed during the year ended August 31 a New Books sold merchandise to Readers Corner at a selling price of $555,000. The merchandise had cost New Books $417,000 b. Two days later, Readers' Corner complained to New Books that some of the merchandise differed from what Readers Comer had ordered. New Books agreed to give an allowance of $10,500 to Readers' Comer Readers' Corner also returned some books, which had cost New Books $2,100 and had been sold to Readers' Corner for $3.600. c. Just three days later, Readers' Corner paid New Books, which settled all amounts owed. 2. Prepare the journal entries to record New Books transactions. (if no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list Journal entry worksheet