**May 11, terms 3/10, n/90, FOB shipping point. The goods cost Troy 16,750 dollars. Sydney pays 410 dollars cash to Express Shipping for delivery charges on the merchandise.****On May 12 Sydney returns 1,400 dollars of the 25,000 dollars of goods to Troy, who receives them the same day and restores them to its inventory. The returned goods had cost Troy 938 dollars.****On May 20 Sydney pays Troy for the amount owed. Troy receives the cash immediately.**

This question aims to find the three **transactions** for the **seller and buyers**. This question uses the concept of **inventory** for the **sellers and buyers**.

## Expert Answer

**Buyer entries** are:

MayÂ $ 11 $ the **Merchandise** Dr **inventory** isÂ $ 25000 $ dollars.

**Account** **payable** Cr isÂ $ 25000 $ dollars.

Merchandise **inventory** Dr is $ 410 $ dollars.

Its **cash** isÂ $ 410 $ dollars.

MayÂ $ 12 $ the **Merchandise** Dr **account payable** isÂ $ 1400 $ dollars.

**Merchandise inventory** Cr is $ 1400 $ dollars.

$ 20 $Â May the Dr **account payable** isÂ $ 23600 $ dollars.

And its **cash** isÂ $ 22892 $ dollars.

**Merchandise inventory** is $ 708 $ dollars.

Now **transaction entries** for Seller are:

$ 11 $Â May the Dr **account receivable** isÂ $ 25000 $ dollars.

**Revenue of sales** Cr is $ 25000 $ dollars.

Good sold cost is $ 16750 $ dollars.

**Inventory merchandise**Â Dr is $ 16750 $ dollars.

$ 12 $Â May the Dr sales **allowances** and **return** isÂ $ 1400 $ dollars.

**Receivable account** Cr is $ 1400 $ dollars.

**Inventory merchandise**Â Dr is $ 938 $ dollars.

**Good sold** cost is $ 938 $ dollars.

$ 20 $Â May the Dr cash isÂ $ 22892 $ dollars.

**Discount** is $ 708 $ dollars.

And the **receivable account** is $ 23600 $ dollars.

## Numerical Results

The **discount amount** for the **seller** is $ 708 $ dollars.

## Example

On May 11 Sydney takes delivery of the $25,000 $ dollars worth of goods it ordered from Troy to resell: the invoice is dated. Terms: May 11, FOB shipment point, 3/10, n/90. Troy paid $16,750 $ dollars for the goods. Sydney pays Express Shipping $410$ dollars in cash for the product’s delivery fees. $12$ Sydney gives Troy $ 1,400 $ dollars from $25,000$ dollars worth of products back, which Troy accepts that day and adds to its inventory. Troy had spent $938.20 $ dollars on the returned products. Sydney reimburses Troy for the debt. Troy gets the money right away. Prepare journal entries for these transactions for the seller and buyers.

**Buyer entries** are:

MayÂ $ 11 $ the **Merchandise Dr inventory** isÂ $ 26000 $ dollars.

**Account payable** Cr isÂ $ 26000 $ dollars.

**Merchandise inventory** Dr is $ 410 $ dollars.

Its **cash** isÂ $ 410 $ dollars.

MayÂ $ 12 $ the **Merchandise** Dr **account payable** isÂ $ 1400 $ dollars.

**Merchandise inventory** Cr is $ 1400 $ dollars.

$ 20 $Â May the Dr **account payable** isÂ $ 24600 $ dollars.

And its **cash** isÂ $ 23862 $ dollars.

**Merchandise inventory** is $ 738 $ dollars.

Now **transaction entries** for Seller are:

$ 11 $Â May the Dr **account receivable** isÂ $ 26000 $ dollars.

**Revenue of sales** Cr is $ 26000 $ dollars.

**Good sold cost** is $ 16750 $ dollars.

**Inventory merchandise**Â Dr is $ 16750 $ dollars.

$ 12 $Â May the Dr sales **allowances** and** return** isÂ $ 1400 $ dollars.

**Receivable account** Cr is $ 1400 $ dollars.

**Inventory merchandise**Â Dr is $ 938 $ dollars.

Good **sold cost** is $ 938 $ dollars.

$ 20 $Â May the Dr **cash** isÂ $ 23862 $ dollars.

**Discount** is $ 738 $ dollars.

And the **receivable account** is $ 24600 $ dollars.