Problem
Oriole Manufacturing Inc. shipped finished goods inventory with a total cost of $56,800 to Blue Spruce Retailing Ltd. on May 1. The agreement between the two companies was that Blue Spruce was to sell the product on consignment for Oriole Manufacturing. Oriole paid $4,100 in shipping costs in order to ship the merchandise. Blue Spruce paid a local newspaper $2,200 for advertising costs (which Oriole promised to reimburse). At September 30, the end of the accounting year for both companies, Blue Spruce had sold 75% of the merchandise for total sales of $69,900. Blue Spruce notified Oriole of the sales, retained a 20% commission, and remitted the cash due to Oriole.
• Prepare the journal entries required by the above transactions on the books of Oriole Manufacturing.