On May 11, 2014, Wilson Purchasing purchased $25,000 of merchandise from Hostel Sales; terms 3/10, n/90, FOB Hostel Sales. The cost of the goods to Hostel was $20,000. Wilson paid $1,500 to Express...

On May 11, 2014, Wilson Purchasing purchased $25,000 of merchandise from Hostel Sales; terms 3/10, n/90, FOB Hostel Sales. The cost of the goods to Hostel was $20,000. Wilson paid $1,500 to Express Shipping Service for the delivery charges on the merchandise on May 11. On May 12, Wilson returned $4,000 of goods to Hostel Sales, which restored them to inventory. The returned goods had cost Hostel $3,200. On May 20, Wilson mailed a cheque to Hostel for the amount owed on that date. Hostel received and recorded the cheque on May 21. Required a. Present the journal entries that Wilson Purchasing should record for these transactions. Assume that Wilson uses a perpetual inventory system. b. Present the journal entries that Hostel Sales should record for these transactions. Assume that Hostel 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 4% 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 and round all calculations to the nearest whole cent. View Solution:

On May 11 2014 Wilson Purchasing purchased 25 000 of merchandise