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[ 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 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.
- New Books sold merchandise to Readers Corner at a selling price of $560,000. The merchandise had cost New Books $419,000.
- 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 $11,000 to Readers Corner. Readers Corner also returned some books, which had cost New Books $2,200 and had been sold to Readers Corner for $3,700.
- Just three days later, Readers Corner paid New Books, which settled all amounts owed.
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