Buffalo corporation shipped $21,200 of merchandise on consignment to gooch company. buffalo paid freight costs of $1,900. gooch company paid $520 for local advertising, which is reimbursable from buffalo. by year-end, 61% of the merchandise had been sold for $21,400. gooch notified buffalo, retained a 10% commission, and remitted the cash due to buffalo.
prepare buffalo entry when the cash is received.

1) Cash Dr.  $19,260 (21,400-2,140)

Commission Expense Dr.  $2,140 (10% of 21,400)

                           Sales Cr.  $21,400

2) COGS Dr. $12932 (61% of 21,200)

                Inventory Cr. $12932

Explanation:

Cash received to Buffalo Corp. shall be total sales i.e. $21,400 less the commission retained by Gooch Co. i.e. 10% of $21,400.

Buffalo Corp. shall expense out the commission and Sales shall be recorded by the gross amount.

the second entry shows Inventory being credited by the amount of Cost i.e 61% of goods shipped to Gooch (61% of $21,200).

answer: most likely c

explanation:

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