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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
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.
- New Books sold merchandise to Readers Corner at a selling price of $565,000. The merchandise cost New Books $421,000.
- 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 $11,500 to Readers Corner.
- Just three days later, Readers Corner paid New Books, which settled all amounts owed.
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