Final answer:
The question involves business transactions between Hellenic Company and Argo Apples. The journal entries for each company are created based on the sales transaction, the return of goods, and the payment process. This entails reports on sales, cost of goods sold, accounts receivable, and inventory for Argo Apples, and inventory and accounts payable for Hellenic Company.
Step-by-step explanation:
Journalizing Transactions for Hellenic Company and Argo Apples
On February 1st, Argo Apples sells apples worth $4000 to Hellenic Company, with terms 3/10, n/30, FOB shipping point. The cost of sales for Argo Apples is $1000. On February 2nd, Hellenic Company pays for shipping. By February 3rd, half of the apples are returned, and on February 5th, Hellenic Company pays the outstanding balance to Argo Apples.
For Argo Apples, the journal entries would be:
- Feb 1st: Debit Accounts Receivable $4000, Credit Sales $4000.
- Feb 1st: Debit Cost of Goods Sold $1000, Credit Inventory $1000.
- Feb 3rd: Debit Sales Returns and Allowances, Credit Accounts Receivable (for half the amount sold).
- Feb 5th: Debit Cash, Credit Accounts Receivable (remaining balance after return and discount).
For Hellenic Company, the journal entries would include:
- Feb 1st: Debit Inventory $4000, Credit Accounts Payable $4000.
- Feb 3rd: Debit Accounts Payable, Credit Inventory (for half the amount purchased).
- Feb 5th: Debit Accounts Payable, Credit Cash (payment with discount, if any).