Horne Inc. and Sperling Renovations Ltd. both sell goods and use the perpetual inventory system. The company had $3,000 of merchandize inventory at the start of its fiscal year, January 1, 2016. During the year, the company had only the following transactions:
|
May |
5 |
Horne sold $4000 of merchandize on account to Sperling Renovations Ltd. For terms 2/10, net 30. Cost of merchandize to Horne from its supplier was $2,500. |
|
7 |
Sperling returned $500 of merchandize; Horne issued a credit memo. (Cost of merchandize to Horne was $300) |
|
|
15 |
Horne received the amount due from Sperling Renovations Ltd. |
A physical count and valuation of merchandize inventory at May 31, the fiscal year-end, showed $700 of goods on hand.
Required: Prepare journal entries to record the above transactions and adjustment(include general ledger account numbers and brief descriptions):
- In the records of Horne Inc.
- In the records of Sperling Renovations Ltd.
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