Business, 18.03.2021 01:20 kingemzy

On June 10, Novak Corp. purchased $8,350 of merchandise on account from Sarasota Company, FOB shipping point, terms 2/10, n/30. Novak pays the freight costs of $560 on June 11. Damaged goods totaling $350 are returned to Sarasota for credit on June 12. The fair value of these goods is $80. On June 19, Novak pays Sarasota Company in full, less the purchase discount. Both companies use a perpetual inventory system. (a) Prepare separate entries for each transaction on the books of Tuzun Company.
(b) Prepare separate entries for each transaction for Epps Company. The merchandise purchased by Tuzun on June 10 had cost Epps $4,800.

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Answer from: bcox32314

On the books of Tuzun Company:

On June 10

Dr Merchandise Inventory $8,350

Cr Accounts payable$8,350

On June 11

Dr Merchandise inventory $560

Cr Cash $560

On June 12

Dr Account payable$350

Cr Merchandise inventory $350

On June 19

Dr Accounts payable $8,000

Cr Cash $7,840

Cr Merchandise Inventory $160

On the books of Epps Company:

On June 10

Dr Accounts receivable $8,350

Cr Service revenue $8,350

(Being service provided is recorded)

Dr Cost of goods sold $4,800

Cr Merchandise inventory $4,800

(Being inventory sold at cost)

On June 12

Dr Accounts receivable $350

Cr Service revenue A/c $350

(Being returned inventory is recorded)

Dr Cost of goods sold $80

Cr Merchandise inventory A/c $80

(Being fair value is recorded)

On June 19

Dr Cash $7,840

Dr Sales discount $160

Cr Accounts receivable A/c $800

(Being payment is received)

Explanation:

A. Preparation of separate entries for each transaction on the books of Tuzun Company.

On the books of Tuzun Company:

On June 10

Dr Merchandise Inventory $8,350

Cr Accounts payable$8,350

(Being inventory purchased on credit)

On June 11

Dr Merchandise inventory $560

Cr Cash $560

(Being freight is paid by cash)

On June 12

Dr Account payable$350

Cr Merchandise inventory $350

(Being returned inventory is recorded)

On June 19

Dr Accounts payable $8,000 ($8,350 - $350)

Cr Cash $7,840

(8000-160)

C Merchandise Inventory $160[ ($8,350 - $350) × 2%]

(Being due amount is paid and the remaining balance is credited to the cash account)

B. Preparation of separate entries for each transaction for Epps Company.

On the books of Epps Company:

On June 10

Dr Accounts receivable $8,350

Cr Service revenue $8,350

(Being service provided is recorded)

Dr Cost of goods sold $4,800

Cr Merchandise inventory $4,800

(Being inventory sold at cost)

On June 12

Dr Accounts receivable $350

Cr Service revenue A/c $350

(Being returned inventory is recorded)

Dr Cost of goods sold $80

Cr Merchandise inventory A/c $80

(Being fair value is recorded)

On June 19

Dr Cash $7,840

Dr Sales discount $160

Cr Accounts receivable A/c $800

(Being payment is received)

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On June 10, Novak Corp. purchased $8,350 of merchandise on account from Sarasota Company, FOB shippi...

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