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The transactions listed below are typical of those involving Southern Sporting Goods (SSG) and Sports R Us (SRU). SSG is a wholesale merchandiser and SRU
The transactions listed below are typical of those involving Southern Sporting Goods (SSG) and Sports R Us (SRU). SSG is a wholesale merchandiser and SRU is a retail merchandiser. Assume all sales of merchandise from SSG to SRU 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 December 31.
- SSG sold merchandise to SRU at a selling price of $145,000. The merchandise had cost SSG $102,000.
- Two days later, SRU complained to SSG that some of the merchandise differed from what SRU had ordered. SSG agreed to give an allowance of $5,000 to SRU. SRU also returned some sporting goods, which had cost SSG $14,000 and had been sold to SRU for $18,500. No further returns are expected
- Just three days later SRU paid SSG, which settled all amounts owed.
Parts
- Record the inventory purchased of $145,000 on account.
- Record the return of unsatisfactory merchandise for which credit was given.
- Record the payment in full
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