Question - 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, 2013.
1. Record the sales on account of $550,000 to Readers' Corner.
2. Record the cost of goods sold of $415,000.
3. Record the return of $10,000 unsatisfactory merchandise by Readers' Corner for which credit was given to the customer.
4. Record the receipt of payment in full from Readers' Corner.