Financial accounting 16th Edition by Jan Williams,Susan Haka,Mark Bettner ,Joseph Carcello

تمرين 7

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:
Feb. Siogo Shoes sold Sole Mates 100 pairs of hiking boots on account, terms 1/10, n/30.
The cost of these boots to Siogo Shoes was $60 per pair, and the sales price was $100 per pair.
Feb.2 United Express charged $80 for delivering this merchandise to Sole Mates..hese charges were split evenly between the buyer and seller and were paid immediately in cash.
Feb.3 Sole Mates returned 10 pairs of boots to Siogo Shoes because they were the wrong size.iogo Shoes allowed Sole Mates full credit for this return.
Feb.9 Sole Mates paid the remaining balance due to Siogo Shoes within the discount period.
Both companies use a perpetual inventory system.
Instructions
a.ecord this series of transactions in the general journal of Siogo Shoes.The c'ompany records sales at gross sales price.)
b.ecord 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.ole Mates does not always have enough cash on hand to pay for purchases within the dis­count period.owever, 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.