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Present the journal entries that wilson purchasing should

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On May 11, 2020, Wilson Purchasing purchased $21,500 of merchandise from Happy Sales; terms 2/10, n/90, FOB Happy Sales. The cost of the goods to Happy was $16,500. Wilson paid $1,150 to Express Shipping Service for the delivery charges on the merchandise on May 11. On May 12, Wilson returned $3,300 of goods to Happy Sales, which restored them to inventory. The returned goods had cost Happy $2,500. On May 20, Wilson mailed a cheque to Happy for the amount owed on that date. Happy received and recorded the cheque on May 21.

Required:

Question a. Present the journal entries that Wilson Purchasing should record for these transactions. Assume that Wilson uses a perpetual inventory system.

Question b. Present the journal entries that Happy Sales should record for these transactions. Assume that Happy uses a perpetual inventory system.

Analysis Component:

Assume that the buyer, Wilson Purchasing, borrowed enough cash to pay the balance on the last day of the discount period at an annual interest rate of 3% and paid it back on the last day of the credit period. Calculate how much the buyer saved by following this strategy. (Use a 365-day year. Round intermediate calculations and final answer to 2 decimal places.)

Reference no: EM132568670

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