PB6-1 Reporting Purchase Transactions between Wholesale and Retail Merchandisers Using Perpetual Inventory Systems [LO 6-3]

[The following information applies to the questions displayed below.]

The transactions listed below are typical of those involving Southern Sporting Goods and Sports R Us. Southern Sporting Goods is a wholesale merchandiser and Sports R Us is a retail merchandiser. Assume all sales of merchandise from Southern Sporting Goods to Sports R Us are made with terms 3/10, 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 December 31.

a.
Southern Sporting Goods sold merchandise to Sports R Us at a selling price of $140,000. The merchandise had cost Southern Sporting Goods $100,000.

b.
Two days later, Sports R Us complained to Southern Sporting Goods that some of the merchandise differed from what Sports R Us had ordered. Southern Sporting Goods agreed to give an allowance of $4,500 to Sports R Us.

c. Just three days later Sports R Us paid Southern Sporting Goods, which settled all amounts owed.
5.

value:
1.66 points

Required information

PB6-1 Part 2

2. Prepare the journal entries that Sports R Us would record. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)