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E18-7B (Sales Recorded Both Gross and Net)On October 5, Veri-Wyn Company sold to Dunn & Brooks merchandise having a sale price of $23,000 with terms of 1/10, n/30, f.o.b. shipping point. Dunn & Brooks received the goods on October 9 and promptly notified

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E18-7B (Sales Recorded Both Gross and Net)On October 5, Veri-Wyn Company sold to Dunn & Brooks merchandise having a sale price of $23,000 with terms of 1/10, n/30, f.o.b. shipping point. Dunn & Brooks received the goods on October 9 and promptly notified Veri-Wyn Company that merchandise costing $2,400 contained flaws that rendered it worthless. The same day Veri-Wyn Company issued a credit memo covering the worthless merchandise and asked that it be returned at company expense. An invoice totaling $230, terms n/30, was received by Dunn & Brooks on October 8 from Sugarland Express for the freight cost. The freight on the returned merchandise was $36, paid by Veri-Wyn Company on October 25. Finally, Veri-Wyn received a check for the balance due from Dunn & Brooks on November 2.;Instructions;(a) Prepare journal entries on Veri-Wyn Company books to record all the events noted above under each of the following bases.;(1) Sales and receivables are entered at gross selling price.;(2) Sales and receivables are entered net of cash discounts.;(b) Prepare the journal entry under basis 2, assuming that Dunn & Brooks remitted the payment on October 14.

 

Paper#75368 | Written in 18-Jul-2015

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