Question: Refer to Exercise and prepare journal entries to record each of the merchandising transactions assuming that the periodic inventory system is used by both the buyer and the seller.
Exercise: On May 11, Smythe Co. accepts delivery of $30,000 of merchandise it purchases for resale from Hope Corporation. With the merchandise is an invoice dated May 11, with terms of 3y10, ny90, FOB shipping point. The goods cost Hope $20,000. When the goods are delivered, Smy the pays $335 to Express Shipping for delivery charges on the merchandise. On May 12, Smy the returns $1,200 of goods to Hope, who receives them one day later and restores them to inventory. The returned goods had cost Hope $800. On May 20, Smy the mails a check to Hope Corporation for the amount owed. Hope receives it the following day. (Both Smy the and Hope use a perpetual inventory system.)
1. Prepare journal entries that Smy the Co. records for these transactions.
2. Prepare journal entries that Hope Corporation records for these transactions