Crane Company buys merchandise on account from Sheridan Company. The selling price of the goods is $1,350 and the cost of the goods sold is $655. Both companies use perpetual inventory systems.

Journalize the transactions on the books of both companies. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Question

Kameron Allison

Business

28 January, 12:19

Crane Company buys merchandise on account from Sheridan Company. The selling price of the goods is $1,350 and the cost of the goods sold is $655. Both companies use perpetual inventory systems.

Journalize the transactions on the books of both companies. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

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Raymond · Answer 1

The journal entry is as follows

In the books of Crane company

Merchandise Inventory A/c $1,350

To Accounts payable A/c $1,350

(Being inventory purchased on credit)

In the books of Sheridan Company

Account receivable A/c Dr $1,350

To Sales revenue $1,350

(Being the goods are sold on credit)

Cost of goods sold A/c Dr $655

To Merchandise Inventory A/c $655

(Being goods are sold at cost)