Question

Transactions for Buyer and Seller Shore Co. sold merchandise to Blue Star Co. on account, $111,400, terms FOB shipping point, 2/10, n/30. The cost of the goods sold is $66,840. Shore paid freight of $1,800. Journalize Shore Co.'s entry for the sale, purchase, and payment of amount due. If an amount box does not require an entry, leave it blank. Journalize Blue Star Co.'s entry for the sale, purchase, and payment of amount due. If an amount box does not require an entry, leave it blank.

Answer 1

SHORE CO BOOKS:

accounts receivables 111,400 debit

sales revenues 111,400 credit

--to record the sale to Blue Star Co---

COGS 66,840 debit

inventory 66,840 credit

--to record cost of goods sold in previuos sale--

freight-out 1,800 debit

cash 1,800 credit

--to record payment of freight to transportist--

Cash 111,400 debit

Accounts Receivable 111,400 credit

--to record collectiong from Blue Star CO--

BLUE STAR CO BOOKS

Inventory 111,400 debit

Accounts Payable 111,400 credit

--to record the purchase of goods from SHORE CO--

Accounts Payable 111,400 debit

Cash 111,40 credit

--to record payment to SHORE CO--

Step-by-step explanation:

Shore paid freight of $1,800 as the transfership of ownership occurs at destination point thus, the good belong to Shore and must carry the cost of transportation.

Blue start only does the purchase and payment entries.

We assume the payment is at nominal as we aren't given the information it was during discount date.