Question

Exercise 5-5

Presented below are transactions related to Ivanhoe Company, Ltd.

1.		On December 3, Ivanhoe sold HK$648,400 of merchandise to South China Co., Ltd. terms 3/10, n/30, FOB shipping point. The cost of the merchandise sold was HK$377,200.
2.		On December 8, South China was granted an allowance of HK$26,500 for merchandise purchased on December 3.
3.		On December 13, Ivanhoe received the balance due from South China.

(a) Prepare the journal entries to record these transactions on the books of Ivanhoe Company, Ltd. using a perpetual inventory system. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

(b) Assume that Ivanhoe Company, Ltd. received the balance due from South China Co., Ltd. on January 2 of the following year instead of December 13. Prepare the journal entry to record the receipt of payment on January 2. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Answer 1