Financial & Managerial Accounting 17th Edition by Jan Williams ,Susan Haka,Mark Bettner,Joseph Carcello

تمرين 6

Merchandising Transactions
The following is a series of related transactions between Siogo Shoes, a shoe wholesaler, and Sole Mates, a chain of retail shoe stores:
Both companies use a perpetual inventory system.
Instructions
a. Record this series of transactions in the general journal of Siogo Shoes. (The company records sales at gross sales price.)
b. Record this series of transactions in the general journal of Sole Mates. (The company records purchases of merchandise at net cost and uses a Transportation-in account to record transportation charges on inbound shipments.)
c. Sole Mates does not always have enough cash on hand to pay for purchases within the discount period. However, it has a line of credit with its bank, which enables Sole Mates to easily borrow money for short periods of time at an annual interest rate of 11 percent. (The bank charges interest only for the number of days until Sole Mates repays the loan.) As a matter of general policy, should Sole Mates take advantage of 1/10, n/30 cash discounts even if it must borrow the money to do so at an annual rate of 11 percent? Explain fully-and illustrate any supporting computations.