Question

Alled Parts was organized on May 1, 2015, and made its first purchase ofl merchandise on May 3. The a On May 7, Baker retums 357 units because they did not ft the oustomer's needs Allied Parts estores b. On May &Baker discovers that 85 units are damaged but are still of some use and theretore keeps the the units to its inventory discovers hat 1 Allied Parts sends a $122 oredit memerandum to compensate. Baker retums the remaining 41 unts to Allied Parts. Allied Parts restores the 41 neturned units to its inventory Prepare entries for Allied Pats to necord the May 5 sale and each of the above separate trasactions using Journal entry worksheet Allied Parts sold 1.020 of the units for $12 per unit to Baker Co On May 5. Allied Parts sold 1.020 of the units for $12 per unit to Baker Co. Terms of the sale were 2/10, n/60. May 05 ぐ00

The second and last picture are the same question. The first is by itself

Answer 1

1. Allied parts solution

Date	General Journal	Debit	Credit
may 5	accounts receivable	12240
	sales		12240
	( sold merchandise on credit ) (1020 * $12 )
may 5	cost of goods sold	8160
	merchandise inventory		8160
	( to record cost of sale ) (1020 * $8 )
may 7	sales returns and allowance	4284
	accounts receivable		4284
	( accepted a return from customer ) (357 * $12 )
may 7	merchandise inventory	2856
	cost of goods sold		2856
	( returned merchandise to inventory ) ( 357 * $8 )
may 8	sales returns and allowance	340
	accounts receivable		340
may 15	sales returns and allowance	614
	accounts receivable		614
	( accepted a return from a customer ) [122 + (41 * $12)]
may 15	merchandise inventory	328
	cost of goods sold		328
	( returned merchandise to inventory ) ( 41 * $8 )

2. SANTA FE COMPANY SOLUTION :

1.Entries Santa Fe Company should record

Transaction	General Journal	Debit	Credit
1	merchandise inventory	26900
	accounts payable		26900
2	accounts payable	26900
	merchandise inventory (26900 * 2%)		538
	cash		26362

2.Entries that Mesa should record

Transaction	General Journal	Debit	Credit
1	accounts receivable	26900
	sales		26900
2	cost of goods sold	18346
	merchandise inventory		18346
3	cash	26362
	sales	538
	accounts receivable		26900

3.

Savings from discount taken

$538

Interest Expense On Funds Borrowed

Amount borrowed	$26362
Number of days interest	50
Interest expense	$289
Buyer's net savings	$249

Interest per year = Amount borrowed to pay with discount * Annual rate of interest = 26362 * 8% = $2108.96

Interest per day = $2108.96 / 365 days = $5.77

savings from discount taken ($26900 - $26362)	$538
interest paid on 50days loan ( 50days * $5.77 )	288.5
Net savings from borrowing to pay in discount period	249.5