Question

he following are selected transactions of XYZ Ltd:

12 July Sold goods on account to ABC Ltd for $3750, terms 1/10, n/30. The cost of the goods sold was $2500.

19 July   Forwarded a credit note for $300 to ABC Ltd covering part of the goods sold on 12 July, which cost $200, that were returned by ABC Ltd as inappropriate. The goods returned were not defective.

21 July   Received from ABC Ltd a cheque in full settlement of the above transactions.

Both XYZ Ltd and ABC Ltd use perpetual inventory system. Assuming that neither business is registered for GST.

Required

Record the above transactions in the general journal of

(1) XYZ Ltd (5.5 marks), and

(2) ABC Ltd (3.5 marks)

Answer 1

In the books of XYZ Ltd:

Date	Account Titles	Debit	Credit
July 12	Accounts receivable - ABC Ltd.	3750
	Sales revenue		3750
July 12	Cost of goods sold	2500
	Inventory		2500
July 19	Sales returns	300
	Accounts receivable - ABC Ltd.		300
July 19	Inventory	200
	Cost of goods sold		200
July 21	Cash (3450 - 1%)	3415.5
	Sales discounts	34.5
	Accounts receivable - ABC Ltd.		3450

In the books of ABC Ltd:

Date	Account Titles	Debit	Credit
July 12	Inventory	3750
	Accounts payable - XYZ Ltd.		3750
July 19	Accounts payable - XYZ Ltd.	300
	Inventory		300
July 21	Accounts payable - XYZ Ltd.	3450
	Cash (3450 - 1%)		3415.5
	Inventory (discount)		34.5