Question

Ois June 10. Ivanhoe Gompany purchaicd 59500 of merchandise on account from 5 arasota Company. FOBshipping point, terms 1/10. N30. Ivarhoe pays the freight costs of $580 on June 11 Goods totalini, $400 are returned to 5 arasota for credit on June 12. On June 19. Ivarhoe pays 5arasota Compony in fuil. kess the discount Both companes use a perpetgal irventory systeim. (a) Prepye separate entries for exchtrarsaction on the books of lvartioe Company ilist of debit entries before credit entries. Credit occount tiles are eutomptically indented when amount is entered Do not indent inasuolly If no entry is required, select "No Entry" for the account tities and enter of or the amoents) Prepare separate entries for each transaction for Sarasota Company. The merchandise purchaved by lvanhpe on lune 10 cost. Sarasota $4.500, and the goods returned cost $ arasoto $190. (List afi debit entries before credit entries. Gredit account eides are. outomatically indented when amount is entered. Do not indent manually If no entry is required, select "No Entry" for the account bities and anter 0 for the amounts)

Answer 1

On June 10, Ivanhoe Company purchases merchandise from Sarasota Company. The transactions on the books of Ivanhoe include debiting Merchandise Inventory and crediting Accounts Payable. The transactions on the books of Sarasota Company include debiting Accounts Receivable and crediting Sales Revenue.

Step-by-step explanation:

On June 10, Ivanhoe Company purchased $59,500 of merchandise on account from 5 Sarasota Company. Since the goods are shipped FOB shipping point, Ivanhoe is responsible for the shipping costs. The terms of the purchase are 1/10, n/30, which means that Ivanhoe can take a 1% discount if they pay within 10 days, otherwise the full amount is due within 30 days. On June 11, Ivanhoe pays the freight costs of $580. On June 12, goods totaling $400 are returned to Sarasota Company for credit. Finally, on June 19, Ivanhoe pays Sarasota Company in full, deducting the applicable discount.

Separate entries on the books of Ivanhoe Company:

1. Debit: Merchandise Inventory - $59,500
2. Credit: Accounts Payable - $59,500

On June 11:

1. Debit: Freight-In - $580
2. Credit: Cash - $580

On June 12:

1. Debit: Accounts Payable - $400
2. Credit: Merchandise Inventory - $400

On June 19:

1. Debit: Accounts Payable - $58,820
2. Debit: Purchase Discounts - $680
3. Credit: Cash - $58,820

Separate entries on the books of Sarasota Company:

1. Debit: Accounts Receivable - $59,500
2. Credit: Sales Revenue - $59,500

On June 12:

1. Debit: Sales Returns and Allowances - $400
2. Credit: Accounts Receivable - $400

On June 19:

1. Debit: Cash - $58,820
2. Credit: Accounts Receivable - $58,820