Question

2. Northwestern Company is a consignee company which sells goods for other companies. During 2018, they received goods from St. Cloud Company costing that company $400,000. They spent $10,000 on advertising and $1,000 on freight both to be reimbursed by St. Cloud and were allowed a commission of 15% of the selling price of $700,000 for goods sold in 2018.

Record on the books of St. Cloud all necessary entries pertaining to the delivery of the inventory, the advertising and freight, the cash sales of $700,000, and the remittance from Northwestern.

Answer 1

Requirement:- Record on the books of St. Cloud all necessary entries pertaining to the delivery of the inventory, the advertising and freight, the cash sales of $700,000, and the remittance from Northwestern.

Solution:- Journal Entries

Account Titles and Explanation	Debit	Credit
Northwestern Company (400,000 + 10,000 + 1,000)	$411,000
Stock		$400,000
Cash (10,000 + 1,000)		$11,000
(Being Stock Transferred and cash paid for advertisment and freight)
Cash	$700,000
Northwestern Company		$700,000
(Being Amount Received)
Northwestern Company (700,000 * 15%)	$105,000
Cash		$105,000
(Being Commission paid)