Please Help Me Finish Th x7 M Midterm #2 ·> C Dezto.mheducation.com/hm.tpx PAWS
ID: 2465140 • Letter: P
Question
Please Help Me Finish Th x7 M Midterm #2 ·> C Dezto.mheducation.com/hm.tpx PAWS for Students [The following information applies to the questions displayed below.] The transactions listed below are typical of those involving New Books Inc. and Readers' Corner. New Books is a wholesale merchandiser and Readers' Corner is a retail merchandiser. Assume all sales of merchandise from New Books to Readers' Corner are made with terms 2/10, n/30, and that the two companies use perpetual inventory systems. Assume the following transactions between the two companies occurred in the order listed during the year ended August 31. a. New Books sold merchandise to Readers' Corner at a selling price of $580,000. The merchandise had cost New Books $427000. b. Two days later, Readers' Corner complained to New Books that some of the merchandise differed from what Readers' Corner had ordered. New Books agreed to give an allowance of $13,000 to Readers Corner. c. Just three days later, Readers' Corner paid New Books, which settled all amounts owed. alue Required Information 6.00 points Required 1. Indicate the effect (direction and amount) of each transaction on the Inventory balance of Readers Corner. (Enter all amounts as positive values.) Effect orn Transaction Inventory Balance a. 2 7:44Explanation / Answer
Answer 1 Effect of transaction on the Inventory balance of Readers Corner Effect on Transaction Inventory balance a 5,80,000 5,80,000 b -13,000 5,67,000 c - 5,67,000 Answer 2 Journal Entries in the books of Readers Corner Transaction General Journal Debit Credit a Inventory 580000 New Books 580000 (Purchase of Merchandise ffrom New Books) b New Books 13000 Inventory 13000 (Allwance for )Merchandise differed) c New Books 567000 Cash 555660 Cash discount 11340 (Balance amount paid with 2 % cash discount)