The transactions listed below are typical of those involving Amalgamated Textiles and American Fashions. Amalgamated is a wholesale merchandiser and American Fashions is a retail merchandiser. Assume all sales of merchandise from Amalgamated to American Fashions are made with terms 2/10, 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 December 31, 2013.

a.	Amalgamated sold merchandise to American Fashions at a selling price of $230,000. The merchandise had cost Amalgamated $175,000.
b.	Two days later, American Fashions complained to Amalgamated that some of the merchandise differed from what American Fashions had ordered. Amalgamated agreed to give an allowance of $5,000 to American Fashions.
c.	Just three days later, American Fashions paid Amalgamated, which settled all amounts owed.

Required:

1.

Complete the following table, indicating the sign (+ for increase, for decrease) and amount of the effect of each transaction on the Inventory balance of American Fashions. (Enter all amounts as positive values.)

	Effect on
Transaction	Inventory Balance
a.
b.
c.

2.

Prepare the journal entries that American Fashions would record. TIP: The selling price charged by the seller is the purchasers cost. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

Record the inventory purchased of $230,000 on account.

Note: Enter debits before credits.

Transaction

General Journal

Debit

Credit

a
B
C