Question
[ The following information applies to the questions displayed below .] The transactions listed below are typical of those involving New Books Inc. and Readers
[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 3/10, n/30, and that 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 $605,000. The merchandise had cost New Books $437,000. |
b. | Two days later, Readers Corner complained to New Books that some of the merchandise differed from what Readers Corner had ordered. New Books agreed to give an allowance of $9,000 to Readers Corner. |
c. | Just three days later, Readers Corner paid New Books, which settled all amounts owed. |
2.
value: 2.00 points
Required information
Required: | |
1. | Indicate the effect (direction and amount) of each transaction on the Inventory balance of Readers' Corner. (Enter all amounts as positive values.) EFFECT ON INVENTORY: (-/+)? A. B. C. EFFECT ON BALANCE (AMOUNT) A. B. C. 2. Prepare the journal entries that Readers Corner would record and show any computations. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)
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