Question

he following merchandise transactions occurred in December. Both companies use a perpetual inventory system.

Dec.	3		Swifty Ltd. sold goods to Blue Spruce Corp. for $81,700, terms n/15, FOB shipping point. The inventory had cost Swifty $43,500. Pictou’s management expected a return rate of 3% based on prior experience.
	7		Shipping costs of $1,140 were paid by the appropriate company.
	8		Blue Spruce returned unwanted merchandise to Swifty. The returned merchandise has a sales price of $2,520, and a cost of $1,340. It was restored to inventory.
			dec 11 Swifty received the balance due from Blue Spruce. Record the above transactions in the books of Blue Spruce. (List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to the nearest whole dollar, e.g. 5,275.)

Answer 1

Ans: Journal Entries

Date	Account title and explanation	Debit($)	Credit($)
Dec 3	Merchandise Inventory	81,700
	Accounts payable-Swifty Ltd		81,700
	{ to record purchase}
Dec 7	Merchandise Inventory	1,140
	Cash		1,140
	{ to record freight paid}
Dec 8	Accounts payable-Swifty Ltd	2,520
	Merchandise Inventory		2,520
	{ to record Purchase return}
Dec 11	Accounts Payable-Swifty Ltd (81,700-2,520)	79,180
	Cash		79,180
	{ to record Amount paid}