Problem-11: Accounting for Merchandising Operations

1. On December 3, R. Humphrey Company sold $570,000 of merchandise to Frazier Co., terms 1/10, n/30, FOB destination. R Humphrey paid $400 for freight charges. The cost of the merchandise sold was $350,000.
2. On December 8, Frazier Co. was granted an allowance of $20,000 for merchandise purchased on December 3.
3. On december 13, R. Humphrey Company received the balance due from Frazier Co.

Instructions

1. Prepare the journal entries to record these transactions on the books of R. Humphrey Company using a perpetual inventory system.
2. Assume that R. Humphrey Company received the balance due from Frazier Co. on January 2 of the following year instead of December 13. Prepare the journal entry to record the receipt of payment on January 2.

Solution