Question

Bushard Company (buyer) and Schmidt, Inc. (seller) engaged in the following transactions during February 2019:Bushard CompanyDATE TRANSACTIONS2019 Feb. 10 Purchased merchandise for $7,000 from Schmidt, Inc., Invoice 1980, terms 1/10, n/30.13 Received Credit Memorandum 230 from Schmidt, Inc., for damaged merchandise totaling $400 that was returned; the goods were purchased on Invoice 1980, dated February 10.19 Paid amount due to Schmidt, Inc., for Invoice 1980 of February 10, less the return of February 13 and less the cash discount, Check 2010.Schmidt, Inc.DATE TRANSACTIONS2019 Feb. 10 Sold merchandise for $7,000 on account to Bushard Company, Invoice 1980, terms 1/10, n/30. The cost of merchandise sold was $4,000.13 Issued Credit Memorandum 230 to Bushard Company for damaged merchandise totaling $400 that was returned; the goods were purchased on Invoice 1980, dated February 10. The cost of the returned goods was $320.19 Received payment from Bushard Company for Invoice 1980 of February 10, less the return of February 13 and less the cash discount, Check 2010.Both companies use the perpetual inventory system. Journalize the transactions above in a general journal for both Bushard Company and Schmidt, Inc. (Round final answers to the nearest whole dollar value.)( I must show three separate journal entry worksheets for each transaction with the Bushard Co. and Five seprate journal entries for the Schmidt co. that shows what occurred along with its corresponding Debits and Credits. My options to title the transaction include some of the following: Accounts payable to Buschard or Schmidt, Accounts Receivable to Buschard or Schmidt, Cash, Cost of Goods Sold, Freight in, Interest Expense or Interest Payable, Merchandise Inventory, Purchases etc...)(The three journal entries for the Bushard co. we have to show the following:Purchased merchandise for $7,000 from Schmidt, Inc., Invoice 1980, terms 1/10, n/30.Received Credit Memorandum 230 from Schmidt, Inc., for damaged merchandise totaling $400 that was returned; the goods were purchased on Invoice 1980, dated February 10.Paid amount due to Schmidt, Inc., for Invoice 1980 of February 10, less the return of February 13 and less the cash discount, Check 2010. As for the five journal entries for the Schmidt Co. we have to show the following:Sold merchandise for $7,000 on account to Bushard Company, Invoice 1980, terms 1/10, n/30The cost of merchandise sold was $4,000.Issued Credit Memorandum 230 to Bushard Company for damaged merchandise totaling $400 that was returned; the goods were purchased on Invoice 1980, dated February 10.The cost of the returned goods was $320.Received payment from Bushard Company for Invoice 1980 of February 10, less the return of February 13 and less the cash discount, Check 2010.)

Answer 1

Answer:

Explanation:

The journal entries are shown below:

Bushard Company:

On Feb 10

Merchandise Inventory A/c Dr $7,000

To Accounts payable A/c $7,000

(Being calculator purchased on credit)

On Feb 13

Accounts payable A/c  Dr $400

      To Merchandise Inventory  A/c $400

(Being purchase return is recorded)

On Feb 19

Accounts payable A/c Dr $6,600

            To Merchandise Inventory  A/c $66    ($6,600 × 1%)

             To Cash A/c $6,534

(Being balance owed is paid)

Schmidt, Inc.

On Feb 10

Accounts receivable A/c Dr $7,000

To Sales A/c $7,000

(Being goods sold on credit)

Cost of goods sold A/c Dr $4,000

To Merchandise inventory A/c $4,000

(Being goods sold at cost)

On Feb 13

Sales return and allowance A/c Dr $400

      To Accounts receivable $400

(Being sales return is recorded)

Merchandise inventory A/c Dr $320

         To Cost of goods sold A/c $320

(Being sales return is recorded)

On Feb 19

Cash A/c Dr                   $6,534

Sales Discount A/c Dr $66

     To  Accounts receivable    $6,600

(Being cash received recorded)

The computation of the account receivable  

= Credit sales - returned goods

= $6,600 - $66

= $6,534

And, the discount would be

= Accounts receivable × percentage given

= $6,600 × 1%

= $66

The remaining amount would be credited to the cash account.